BreadTalk enters deal to acquire food court operator Food Junction for S$80 million

BreadTalk and Toast Box outlets at Singapore’s VivoCity mall; taken September 2018.BreadTalk and Toast Box outlets at Singapore’s VivoCity mall; taken September 2018.

BreadTalk’s wholly owned subsidiary Topwin Investment Holding has entered a deal to acquire food court operator Food Junction Management (FJM) from Food Junction Holdings for S$80 million, Singapore’s iconic bun maker said in a filing to SGX Monday.

The deal will give BreadTalk access to FJM’s network of food courts and food and beverage outlets, providing additional revenue streams and the ability to streamline costs and share resources with the group’s existing business, the filing said.

Food Junction operates 12 food courts in Singapore and three in Malaysia, with one more expected to open in 2020 at The Mall, Mid Valley Southkey in Johor, Malaysia, the filing said.

In addition to bakery and other food operations, BreadTalk also operates food courts under the Food Republic and Food Opera brands in Singapore, Malaysia, China, Hong Kong, Taiwan, Cambodia and Thailand, the filing said.

BreadTalk said it would pay the consideration in cash, funded via internal resources and debt facilities.

On a pro forma basis, if the acquisition had been completed on 1 January 2018, BreadTalk’s earnings per share would have been 2.39 Singapore cents, compared with 2.70 Singapore cents actually reported for the period, the statement said.

Net borrowings, or borrowings less cash, would be S$114.44 million on the same pro forma basis after the deal, compared with S$40.96 million reported, BreadTalk said.

The deal is conditional on obtaining permission from BreadTalk’s shareholders, as well as from the shareholders of Skyscraper Realty and Lippo Capital, which have indirect stakes in the Food Junction Holdings, the statement said.

BreadTalk also said it would apply to the Competition and Consumer Commission of Singapore for a written ruling on whether the proposed acquisition would infringe on competition rules.

Food courts and hawker centers are both widespread in Singapore and deeply embedded in the city-state’s culture and consolidation in the industry could squeeze stall operators.

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