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Leong Hup Takeover Moves Ahead

10 October 2011
Poultry Digital - Two weekly eBulletin for the global poultry industry

MALAYSIA - The take-over of poultry company, Leong Hup, is said to be on track but not yet complete.

All parties involved in the proposed takeover of Leong Hup Holdings Bhd have been meeting several times, executive director, Tan Sri Francis Lau Tuang Nguang, has told The Star of Malaysia.

He declined to give more details, especially in relation to when an EGM would be called for shareholders to vote on the proposal.

"It is premature for me to give you specifics of the progress (of the takeover) now, but everything seems to be going as planned," he told StarBiz after the company's recent AGM.

Mr Lau said he did not know when Leong Hup would call for an EGM to deliberate on the proposed takeover but added that it could likely be in the last quarter of the year or the first quarter of 2012.

In November 2010, Mr Lau had made an offer to take over poultry producer, Leong Hup, and its associate company, Emivest Bhd, an animal feed producer, for 426.65 million ringgit (MYR) via his special-purpose company, Emerging Glory.

Emerging Glory is equally owned by shareholders Francis Lau, Datuk Lau Bong Wong, Lau Chia Nguang and Datuk Lau Eng Guang.

The four Emerging Glory shareholders, Leong Hup Management Sdn Bhd, and persons connected to Emerging Glory have a combined 46.74 per cent stake in Leong Hup.

The same Emerging Glory shareholders, Mega Perfect (M) Sdn Bhd and Leong Hup own 57.08 per cent of Emivest shares.

Asked about the rationale for the takeover bid, Mr Lau said it was purely a business decision and was determined by demand and supply factors in the poultry industry and its related activities.

He added that although the local poultry business was still positive and able to generate good revenue, there were still several problems plaguing the industry.

He explained: "The high cost of importing chicken feed is the main problem faced by a company like ours as the country does not produce quality chicken feed."

Mr Lau said the company imported 95 per cent of its raw materials from Argentina, China, South Africa and the United States.

He said although it was now much cheaper to import the raw materials due to the strengthening ringgit against the US dollar, freak weather in the producing countries could disrupt supplies.

Mr Lau said Malaysia would also have to compete with other countries in importing wheat as demand for the crop would likely surge due to major floods or drought in countries which import wheat.

"Chicken prices are also something sensitive and our consumers expect the prices to remain low and will start making noises when the prices start increasing," he told The Star.

ThePoultrySite News Desk



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