In a filing with Bursa Malaysia today, Hextar said its 51%-owned subsidiary Hextar Fruits Sdn Bhd entered into a share sale agreement with PHG Ever Fresh Group today for the acquisition of 100% equity interest in three of its subsidiaries as well as a 55% equity interest in PHG Ever Fresh Plantation Sdn Bhd (PHG Plantation).
The three subsidiaries are PHG Ever Fresh Food (M) Sdn Bhd, PHG Ever Fresh Food (TK) Sdn Bhd and PHG Wholesale & Retails Sdn Bhd.
The filing said the proposed acquisition is expected to be completed by the fourth quarter of this year. It will be satisfied by Hextar entirely in cash, and funded through a combination of internally-generated funds and bank borrowings. It is also subject to shareholders’ approval.
PHG Group has been operating in the country’s durian industry for more than 30 years. It is one of the pioneering durian processing factories in Malaysia and one of the largest exporters of whole frozen durians to China.
Its durian processing factory is located in Raub, Pahang, and is equipped with facilities such as advanced liquid nitrogen freezers and cold storage which keep the durians fresh and preserved for export purposes.
The group supplies and exports more than 3,000 tonnes of durians annually to countries such as China, Hong Kong, Taiwan, Indonesia, Japan, Singapore, the UK, Australia, the US, and other countries.
New income stream
One of Malaysia’s largest agrochemical companies, Hextar said the proposed acquisition will provide it with an opportunity to expand its business activities into the trading of durians and wholesale of fruits.
Group managing director Lee Chooi Keng said: “The prospects and outlook of the durian industry continues to remain strong with increasing demand from both local and global consumers, in particular for the Musang King.
“The proposed acquisition will also allow us to capitalise on the synergistic benefits and incremental revenue derived from supplying agrochemicals and fertiliser products to PHG Group’s suppliers,” she said.
Lee noted that although China has started its durian production activities, it is still “a work-in-progress” and the production volume is deemed negligible compared to the country’s durian demand and consumption.
“As such, China will continue to rely on imports to meet its growing demand for durians. Thus, we are optimistic about our venture into this durian processing business,” she added.
Hextar’s shares closed two sen or 2.6% higher at 79 sen today, giving it a market capitalisation of RM3.11 billion.