Old Chang Kee stock soars on hints of buyout

SINGAPORE - Hungry investors sent curry puff maker Old Chang Kee's share price soaring to an all-time intra-day high on Thursday amid hints of a possible buyout of the firm.

The Catalist-listed counter charged up 25.9 per cent to close at 85 cents with about 2.69 million shares changing hands. The price hit an all-time intra-day high of 88.5 cents.

Before trading opened, the company had announced that executive chairman Han Keen Juan, who controls over 70 per cent of Old Chang Kee, was looking at a possible deal for his firm.

"...the controlling shareholder of (Old Chang Kee) has informed the company that he and his associate have expressed an interest to enter into a possible transaction involving the shares of the company, which may or may not lead to an offer made by a third party," its statement said.

The Old Chang Kee board stressed that "no firm intention to make an offer has been expressed".

The company said it will make further announcements if there are any material developments. Mr Han, 62, could not be reached for further comment.

Based on the latest annual report with the year ended March 31 last year, Mr Han has a 71.6 per cent direct and deemed interest in the business.The market capitalisation of Old Chang Kee was $102.8 million based on Bloomberg data.

According to "back of the envelope" calculations, Mr Han may get as much as $73.6 million if his entire direct and deemed interest stake is bought out.

If a third party bought his stake, this would trigger a general takeover offer for the firm.

Old Chang Kee's IPO price, upon listing in 2008, was 11.5 cents.

Under Mr Han's leadership, the firm has expanded its offerings beyond curry puffs to include fried chicken wings, fishballs, springrolls and other snacks. It sells these food items through kiosks and retail outlets and also provides catering services.

The Old Chang Kee brand can also be found in countries such as Australia, Indonesia and Malaysia.

Mr Terence Wong, co-head of research at DMG & Partners Securities, said privatisation could be on the cards for the company.

"Given that trading volume has been rather weak up till Wednesday, and that the business doesn't require any money, there is no real need for it to stay listed."

Last year, Brand's Essence of Chicken maker Cerebos Pacific was one of the big food companies that went private. More recently, Auric Pacific made a cash offer of 25.5 cents apiece for the remaining 47 million or so Food Junction shares that it does not already own last month.

rjscully@sph.com.sg

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