SINGAPORE - Catalist-listed Japan Foods Holding has teamed up with fellow restaurant operator Minor to franchise and run their brands in Japan, Thailand and China, in a binding memorandum of understanding (MOU) that was signed and announced on Friday (Dec 7).
Japan Foods will run the 50-50 joint-venture company's Thai eatery operations in Japan and provide support for Japanese cuisine operations, while Minor Singapore will run the Japanese food outlets in Thailand and China and support the preparation of Thai cuisine.
The two restaurant operators will fund the joint-venture company with a combined shareholder loan of $2.3 million, split down the middle, which will be disbursed for working capital as determined by the joint venture's directors. The two companies will also contribute equally to the funding for the joint-venture company's projects, unless otherwise agreed.
Under the terms of their deal, Japan Foods and Minor Singapore will each get two board seats, with the chairman to rotate between representatives of each firm.
Japan Foods plans to fund its half of the shareholder loan, as well as any subsequent funding, with internal cash resources, it said in a bourse filing.
But a definitive joint-venture agreement must be reached within six months, or the MOU will be voided and have no legal effect.
The board of Japan Foods said that the proposed joint venture will let both partners leverage each other's operational strengths and industry experience, as well as their respective culinary experience.
Dellen Soh, executive chairman and CEO of Minor Singapore, also noted that the two companies "share many synergies including strong brand portfolios and good operating track records".
Takahashi Kenichi, executive chairman and chief executive of Japan Foods, said in a media statement that the new deal is in line with the group's vision of setting up shop in Japan and added that he looks forward to launching both franchised and in-house brands in Thailand and China.
"We believe that our expanded network will also make us more attractive as a franchise partner to Japanese brand owners who may be looking to expand beyond their local market," said Mr Kenichi.
The proposed joint venture is not expected to have any material impact on Japan Foods' consolidated earnings and net tangible assets per share for the year to March 31, 2019, said the group's board.
Japan Foods' flagship brands include noodle restaurants Ajisen Ramen and Menya Musashi, while Minor Singapore, an indirect subsidiary of Minor International Public Co, operates brands such as Thai Express, Xin Wang Hong Kong Café, Poulet and Buffet Town in Singapore.