Carlsberg sells stake in Luen Heng for RM19.5m

PETALING JAYA: Carlsberg Brewery Malaysia Bhd is selling its 70% shareholding in its subsidiary Luen Heng F&B Sdn Bhd to Capriwood Sdn Bhd for RM19.5 million.
The brewer said in a statement last Friday that the divestment is in line with its parent company Carlsberg Group's strategy to "focus on beer as core" and to maximise the return on capital invested.
It said that the wine and spirits business is very capital intensive due to the high value of the products and the need for keeping inventories. In addition, there are limited commercial synergies between beer and wine/liquor.
"Carlsberg Malaysia has, over some 45 years, evolved from a beer company with one flagship brand to a brewer with dynamic portfolio of international beer, stout and cider brands. To accelerate growth and intensify our focus on beer, stout and cider innovations, we recognise that it is time to prioritise on our core business and make sound investments that deliver higher return of capital investment for our shareholders," said its managing director Henrik Juel Andersen.
Upon completion of the transactions, Carlsberg Malaysia will cease to be a shareholder of Luen Heng. It expects to complete the disposal within 90 days.
The disposal will result in a gain of RM17.4 million at company level and an estimated loss of about RM10.9 million at group level derived from the proceeds of RM19.5 million against the ownership of 70% of the net assets in Luen Heng amounted to RM43.4 million including goodwill of RM5 million as at April 30, 2015.
Carlsberg Malaysia's original cost of investment as of Dec 1, 2008 was RM2.1 million. Proceeds from the sale of shareholding will be re-invested to commercial activities behind its core beer brands and are not expected to have material impact on its second quarter results.
Luen Heng, a distributor and supplier of imported beers, wines and spirits, was incorporated in 2008 as a joint venture between Carlsberg Malaysia and Luen Heng Agency Sdn Bhd. Some of the imported beers in its portfolio include Hoegaarden, Leffe, Franziskaner and Budweiser.
For the financial period ended Dec 31, 2014, Luen Heng reported a net profit of RM10.1 million and earnings per share of RM3.36. Its net assets per share stood at RM15.05.
The brewer said it will continue to sell selected imported beers by Luen Heng in order to offer the most comprehensive locally-brewed and imported range of beers to its customers and consumers.
"The long-standing business synergies between the brewer and the distributor shall continue going forward," it said.