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DBE Gurney Acquires Majority Share of its Rival

by 5m Editor
16 October 2009, at 11:04a.m.

MALAYSIA - DBE Gurney Resources has acquired the majority share of its rival, Visa Jiwa.

DBE Gurney Resources Bhd is buying a 51 per cent stake, comprising 15.3 million shares, in rival poultry player Visa Jiwa Sdn Bhd from several individual and corporate vendors for 30.6 million ringgit (MYR), to be satisfied by 39 million new DBE shares of 50 sen each at par value and MYR 11.1 million cash, reports Malaysia's The Edge.

Vista Jiwa is an integrated poultry operator, involved in poultry breeding, hatchery, processing, feed milling, broiler farming and distribution of poultry products.

DBE said the effective valuation of the acquisition was MYR 19.2 million, consisting of MYR 11.1 million cash and MYR 8.1 million DBE shares valued at 20.81 sen per share based on a five-day weighted average of the market price up to 14 October.

The effective price of MYR 19.2 million works out to a price earnings ratio of 5.73 times.

"The proposed acquisition represents an enhancement to the existing business of the DBE group, particularly its (poultry) breeder, broiler and hatchery operations," the company said.

DBE said its processing plant, which is currently running at a utilisation rate of 44 per cent, is expected to run at full capacity of 18 million processed chickens per year after the acquisition, given the larger base of broiler farms.

The acquisition is expected to increase DBE group's annual production of broiler chickens to 24.5 million from 10 million. The proposed acquisition is expected to be completed by the first quarter of 2010.

The Edge reports that DBE had been loss-making since the financial year ended 31 December, 2006 (FY06), with a net loss of MYR 18.73 million in FY08 on a revenue of MYR 94.26 million but for the six-months ended 30 June 2009, it posted a net profit of MYR 140,000 on revenue of MYR 47.6 million.

Visa Jiwa has been posting profits for the three financial years ending 31 December 2006, 2007 and 2008. It posted a net profit of MYR 6.57 million in FY08 on revenue of MYR 240 million.