Food and beverage company Jumbo Group is reportedly looking to acquire a 75 per cent stake in popular dumpling noodle stall Kok Kee Wanton Noodle for S$2.1 million in cash and shares.
The acquisition move comes after Jumbo reported yesterday night (Nov 26) a net loss of about S$8.2 million for its financial year ended September 30 — this is in contrast to its net profit of S$11.7 million in the previous year.
Additionally, its revenue fell 36.5 per cent to S$97.6 million, from S$153.6 million a year ago, mainly due to the impact of Covid-19.
According to The Business Times, Jumbo will use its internal resources to pay 70 per cent of the purchase price in cash.
The remaining 30 per cent will be satisfied by the allotment and issuance of Jumbo shares based on an agreed formula. The purchase price will be paid in two lump-sum tranches.
Jumbo Group’s First Inorganic Expansion
If the acquisition follows through, Kok Kee’s owner Leong Goh Lian will continue to hold the remaining 15 per cent stake.
The Jumbo Group, which owns a stable of F&B brands including Jumbo Seafood and Ng Ah Sio Bak Kut Teh, plans to expand Kok Kee’s network locally.
It also intends to introduce the “heritage local dish” of wanton mee beyond Singapore shores.
Kok Kee Wanton Noodle started off as a humble stall at Lavender Food Square in 1985.
It later relocated to Jalan Besar and temporarily ceased operations from 2016 to 2019, before reopening at its current location at 30 Foch Road.
According to Jumbo, it is continually exploring opportunities to expand its brands and concepts to strengthen its foothold in the local F&B industry.
“Hawker food and culture is a deeply entrenched aspect in the lives of all Singaporeans. Supporting and having a stake in a day-to-day staple food concept will accelerate Jumbo’s breakthrough into the local mass segment,” said Jumbo.
It added that this proposed acquisition will allow Jumbo to diversify its income streams instead of just focusing on its existing full-service dine-in restaurants.
“Jumbo is cautiously optimistic of the future prospects of Kok Kee and the business as it caters primarily to the local mass market, well suited for fast turnover dine-in or takeaway,” the company noted.
Featured Image Credit: Jumbo Group / Miss Tam Chiak