QSR has done well for good reason, both the pizza and KFC businesses are doing well, and they're expanding rapidly.
QSR Brands – 55 percent owners of the Cambodia’s KFC outlets – fell the most in almost three years in Kuala Lumpur trading, after a takeover bid worth more than US$500 million disappointed some investors.
Idaman Saga, a company part-owned by prominent Malaysian businessman Halim Saad, made an indicative offer for the firm at 5.60 ringgit (US$1.80) per share, QSR said in a statement.
That is less than the 5.76 ringgit closing price on Friday, after its shares surged on speculation of a bid.
Listed in April 2004, QSR controls KFC Holdings (Malaysia), the largest fast-food operator in Malaysia with 540 stores, as well as other regional businesses.
Cambodia’s KFC outlets are 55-percent owned by QSR, with 35 percent held by Cambodian conglomerate The Royal Group and 10 percent by Hong Kong-registered Rightlink Corp. QSR also owns the Pizza Hut chain of restaurants in Malaysia and Singapore
The offer is “pretty low and the upside is limited”, said Ang Kok Heng, who oversees $292 million as chief investment officer at Phillip Capital Management in Kuala Lumpur.
“QSR has done well for good reason, both the pizza and KFC businesses are doing well, and they’re expanding rapidly in India, so people should pay a premium for that,” he added.
There are plans for 10 KFC restaurants to operate in Phnom Penh and one more in Siem Reap by the end of the year. A total of 22 outlets are expected to be open by 2014, according to QSR.
Earlier this year, the firm detailed plans to open 25 chicken farms in Cambodia to supply meat to its outlets.
The $300,000 farm venture is 51-percent owned by QSR and 49 percent by The Royal Group, QSR Deputy Chairman Ahamad Mohamad told The Post.
In February, QSR chairman Tan Sri Muhammed Ali Hasim announced his intention to open Cambodia’s first Pizza Hut by the end of 2010 in an interview with the Malaysia Star newspaper.
Ali said the Pizza Hut outlet is slated for Phnom Penh’s riverside area.
QSR slid 6.4 percent to close on Monday at 5.39 ringgit, its steepest drop since March 10, 2008.
It shares gained slightly to close at 5.40 ringgit each on the Kuala Lumpur exchange yesterday.
The Kuala Lumpur-based company gained 7.7 percent over two days last week in anticipation of an offer.
“The company is prey for corporate raiders because of its coveted asset, the KFC franchise,” Norziana Mohd Inon, an analyst at CIMB Investment Bank, said in a report released before the details of the bid were made public.
The bid for QSR represented a premium of 22 percent over the volume-weighted average price for the firm over the last six months, QSR said in a statement.
“The board of QSR will deliberate on this preliminary proposal and make further announcements in due course,” the statement added.
The 5.60-ringgit bid values QSR at 1.62 billion ringgit (US$519 million), based on the company’s outstanding capital of 290 million shares.
Idaman Saga's part-owner Halim Saad was formerly chairman of Renong, a firm which was once Malaysia’s biggest industrial group.
The government took over the company in 2001 after it floundered during the 1997-1998 Asian financial crisis, becoming the country’s biggest corporate debtor with borrowings of 30 billion ringgit.
Renong was then reorganised, its debt trimmed and later renamed UEM World Bhd.
In November 2008, UEM Land Holdings Bhd was listed on the Kuala Lumpur stock exchange in place of UEM World, focusing on property development.