Coffee shop operator Kimly to take 75% stake in Tenderfresh for $54 million

Kimly expects the proposed acquisition to be completed within five months.
Kimly expects the proposed acquisition to be completed within five months. PHOTO: LIANHE ZAOBAO

SINGAPORE (THE BUSINESS TIMES)  - Coffee shop operator Kimly is acquiring a 75 per cent stake in home-grown food business Tenderfresh for $54 million, giving it an opportunity to expand into the growing halal food industry in Singapore and neighbouring countries.

The company has entered into an acquisition agreement with Tenderfresh founders Soh Chun King, Koh Siew Tin and Chew Kian Ho, Kimly said in a Singapore Exchange filing on Tuesday (May 11).

Kimly has granted a put option to Tenderfresh's vendors, which in turn have granted Kimly a call option. Both the put and call options are "evergreen" and will allow Kimly to acquire the remaining 25 per cent stake in Tenderfresh five years after the completion date.

Prior to the completion of the deal, the Tenderfresh business will be restructured and consolidated. A new entity will be incorporated to hold the business, of which Kimly will own 75 per cent.

Of the $54 million for the acquisition, $38 million will be paid in cash, while $16 million will be satisfied by the issuance of 51.2 million Kimly shares at an issue price of 31.24 cents.

Founded in 1979, Tenderfresh specialised in fried or roasted spring chickens and chicken wings. Today, it manages 14 concepts and 41 outlets, ranging from those offering western fare and traditional local cuisine to food kiosks, as well as catering, retail outlets and original equipment manufacturing (OEM).

It also operates a 25,000 sq ft central kitchen that caters to about 140 brands and outlets. The kitchen supplies semi-finished products to its own outlets.

"As more food and beverage operators look to outsource their food production to reliable OEM partners to reduce manpower needs, the group believes that this will generate new revenue streams," Kimly said.

The proposed acquisition comprises central kitchens, restaurants, kiosks, food stalls, plant and equipment, trademarks and customer relationships that operate via various entities.

As Tenderfresh's central kitchen is halal-certified and its "Tenderbest" branch is "well-recognised by the Muslim community", Kimly believes it will be able to leverage Tenderfresh's competitive edge and wide network in the halal food market to make further headway into the industry.

The Singapore halal mark and standard is also recognised by Brunei, Indonesia and Malaysia, Kimly noted.

Kimly expects the proposed acquisition to be completed within five months. The completion is conditional on satisfactory due diligence investigations by Kimly, the restructuring exercise being completed and no material adverse change to the operations, assets and financial condition of Tenderfresh save for the restructuring.

Shares of Catalist-listed Kimly jumped by 10.9 per cent or 3.5 cents to 35.5 cents as at 9.01am, after the announcement. The company on Tuesday lifted its trading halt called on May 5.

• With additional information from The Straits Times