Serial article regarding M&A on NNA (vol.107)

In this article, we take two M&A deals by Malaysian companies in 2022.

1. Acquisition of confectionery and beverage manufacturer by Fraser & Neave

Fraser & Neave Holdings Bhd. (F&N) announced on 3rd June 2022 that they have decided to acquire 100% shares of Cocoaland Holdings Bhd, which is a beverage and dairy product manufacturer, and make it unlisted company by the end of this year.

F&N was established in 1883, they produce and distribute 100% Halal soft drinks, such as “100PLUS” which is known as one of the Malaysian national drinks, skim milk and so on. Their sales reached approximately MYR 4.1 billion (JPY 123 billion), and their market capital is 7.8 billion (JPY 234 billion). They have their parent company in Singapore and they boast 22 brands, 14 categories of products in total and they export them to 85 countries, especially to the ASEAN. Kirin, which is one of Japanese largest beverage and beer manufacturers, used to have 15% shares of their parent company in the past.

Cocoaland, established in 1980, is a confectionery and beverage company and they have their sales of approximately MYR 210 million (JPY 6.3 billion), and their market capital is about MYR 700 million (JPY 21 billion). They produce snacks and soft drinks etc., and they are granted the Halal certification as well. Especially, their candies named “LOT100” is widely known in Asia. Cocoaland also put their effort into export businesses and close to 50% of their revenue is based on exportation. In recent years, they are increasing their revenue especially because of higher demand for snacks from Saudi Arabia. The article from The Star on 8th June 2022 said that this acquisition generates a huge business synergy since F&N can get wider distribution network and packaged food businesses as the fourth pillar of growth in addition to the existing business pillars such as beverage, dairy and mineral water [i].

2. Merger of major mobile phone service companies, Digi and Celcom.

On 29th June, Digi. Com Bhd., which is a Norwegian telecom company, and Celcom Axiata Bhd. released that they got a notice from the Malaysian Communications and Multimedia Commission to proceed with the merger of them. After they get merged, they will incorporate a new company, which will be named “Celcom Digi Bhd.”. Their parent companies, Telenor and Axiata Group will hold ownership of 33.1% respectively, and remaining balance of shares will be held by governmental institutions. Celcom Digi will continue being listed on the Malaysian stock exchange.

Digi, established in 1995, is a Malaysian mobile phone service company with sales of MYR 6.3 billion (JYP 190 billion), and their market capital is approximately MYR 30 billion (JPY 900 billion) and they have the second largest market share in Malaysia, ranked after Maxis.

On the other hand, Celcom has sales of MYR 6.6 billion, and their market capital is MYR 26 billion (JPY 780 billion). They are established in 1988, and they have the third market share. They will take the share of the market beyond Maxis, which currently holds the No.1 market share. They aim to get merged within 2022[ii].

According to the press release of Digi on 29th June 2022, following this merger, they will invest up to MYR 250 million over 5 years to build a world-class Innovation Center in Kuala Lumpur. This Innovation Center will research utilizing 5G, AI, IoT technology and keep Malaysia at the front line of the global digital evolution[iii]. Since the needs of digitization are increasing more in recent years, better services from them are expected by utilizing their existing techniques, networks, and scale merit with this merger.




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