By MARK RAO / Graphic By TMR
KUB Malaysia Bhd intends to sells its stake in A&W (M) Sdn Bhd to Inter Mark Resources Sdn Bhd for RM34 million and thus exit the food and beverage (F&B) business.
KUB currently holds the franchise and development rights to operate the A&W brand in Malaysia, which was acquired back in 2001 by its wholly owned subsidiary Restoran Kualiti Sdn Bhd.
Under the sale and purchase agreement, it will dispose of its 100% interest in the franchise to Inter Mark Resources for RM30 million cash for the equity portion and RM4 million in reimbursement of intercompany balances.
In a filing last Friday, KUB noted the sale will help it focus on its other businesses, namely energy, gas, agribusiness and telecommunications.
“The proposed disposal will enable KUB to realise its investment that is not considered as strategic and synergistic to its other operations, and at the same time, focus on the group’s core businesses,” it said.
KUB operates some 39 A&W outlets in Malaysia under an extended franchise agreement with A Great American Brand International Pte Ltd, which runs until June next year.
Under the agreement, KUB is expected to open some 13 new outlets by year-end 2019.
The company has been open to selling its stake in the A&W franchise since the middle of last year, citing the neutral outlook for the F&B business, coupled with better returns from its other core businesses.
As at May 31 this year, A&W Malaysia’s net assets stood at RM11.1 million.
The proposed sale is expected to be completed within three months of the date of the agreement, with a three-month extension option.
The sale will result in a oneoff estimated net gain of RM18.9 million for KUB.
KUB shares ended one sen higher at 32 sen last Friday, giving it a RM178.07 million market capitalisation.