KBB buys 10% of China’s World Granary for Rm21mil

KUALA LUMPUR: KBB Resources Bhd, one of the big players in the local vermicelli market, has inked a proposal to acquire 10% of China-based World Granary Holding Ltd (Tianxia) for RM21mil via a share swap.

From a share sale agreement signed yesterday, Tianxia will receive 35 million new KBB shares of 60 sen per share, equivalent to 22.5% of its total shares. To date, the company has issued up to 120 million shares.

KBB Resources group managing director Datuk Seri Chin Seak Huat said the proposed acquisition, pending approval from Bursa Malaysia and shareholders, would pave the way for more collaboration between the two companies in the future.

“Once the acquisition is approved, which will take at least six months for completion, we are also targeting to acquire an additional 10% stake in Tianxia within a year,” he said.

KBB Resources chairman Datuk Seri Dr Erwan Datuk Mohd Tahir, said the proposed acquisition would provide a platform for the two companies to work together to grow their business in sales, distribution and procurement of KBB’s products in the China market, where it can fully leverage on Tianxia’s strong market network. KBB, at the other end of the spectrum, will assist Tianxia to market its products, which are halalcompliant, in Malaysia and the Middle East. The agreement is a good opportunity for Tianxia to expand its network in both markets.

KBB will export vermicelli, instant vermicelli and noodles to China, while Tianxia will export wheat flour and wheat noodles to Malaysia.

Deputy Finance Miniser Datuk Donald Lim Siang Chai, who witnessed the signing ceremony, lauded the business venture as collaboration between the two countries was essential for Malaysia as a growing economy. He noted that at the moment, about 10 China-based companies are listed on the local bourse.

“For foreign investors, Malaysia is a high potential market because of its diversification,” he said. KBB - listed in 2004 - completed a restructuring exercise last year, announcing in its annual report that it had fully repaid and settled its debts amounting to approximately RM60mil in aggregate pursuant to its debt-restructuring scheme, exiting its PN1 status in the process.

It said that the completion of its restructuring exercise marked a new beginning for the company.