BEVERAGE and publishing conglomerate Fraser & Neave (F&N) will buy the Singapore and Malaysian distribution arms of book publisher Penguin Random House for S$8 million as the active acquirer looks to shore up a loss-making business segment.
The consideration is subject to certain post-completion adjustments for cash, debt and working capital, and will be payable in cash from internal resources, F&N said after the market closed.
Penguin Random House, which is incorporated in the United Kingdom, carries out sales and distribution in Singapore and Malaysia through Penguin Random House Pte Ltd and Penguin Random House Sdn Bhd.
Upon the sale, each of those units will enter into an exclusive distribution agreement with Penguin Books, The Random House Group, Dorling Kindersley and Penguin Random House LLC for their English book titles and for products containing the publishers' brands in Singapore and Malaysia.
Penguin Singapore currently has a net asset value of S$6.99 million, while Penguin Malaysia has a net asset value of S$2.96 million.
The acquisition will add a globally recognised brand to F&N's loss-making printing and publishing business.
Printing and publishing incurred a loss before interest and tax of S$5.2 million in the year ended Sept 30, 2016. That was a narrower loss from the year-ago S$15.3 million deficit.
Revenue fell 9.8 per cent to S$307.6 million during that period, with declining print volumes, the ending of a China joint venture and lower textbook sales in the United States dragging down sales in the publishing and printing portion of that business segment.
Retail and distribution, however, improved in fiscal 2016 due to the distribution of Mediacorp magazines and stronger performance from airport stores.
F&N has stated that it is on the lookout for investment opportunities, after selling its Myanmar Brewery operations. As at end-September 2016, the group had S$700 million of cash available for acquisitions and no debt.
In December, the company said that it was raising its stake in Vietnam Dairy Products Joint Stock Co, also called Vinamilk, for about S$709 million.
This article was first published on Jan 10, 2017.
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