Guan Chong expands global footprint with European acquisition

Johor-based Guan Chong Bhd, the world’s fourth largest cocoa grinder, is buying Europe-based chocolate maker Schokinag Holding GMBH (SHG) for €29.93 million (RM137.84 million) as part of the group’s global expansion strategy.

Guan Chong said the proposed acquisition will enable it to expand its presence to Europe and position the group to target new growth opportunities in the world’s largest chocolate consuming market.

“Through the (exercise), the company expands its product range into the downstream industrial chocolate business-to-business market,” it said in a bourse filing today.

Guan Chong, through its sub-subsidiary GCB Cocoa Singapore Pte Ltd, has today entered into a sale and purchase agreement with the Netherlands’ Schokinag Holding BV for the proposed acquisition.

Guan Chong said it will fund the proposed acquisition via internal funds.

SHG is engaged in the business of manufacture, sale and distribution of industrial chocolates, including chocolate couvertures, from liquid to solid, in various sizes, shapes and packaging types, as well as liquid compounds.

Located in Mannheim, Germany, SHG’s industrial chocolate plant has an annual capacity of 90,000 tonnes, while its cocoa processing plant can grind 7,000 tonnes of cocoa beans into cocoa mass per year.

The proposed acquisition is expected to be completed within the first quarter of 2020.

“We are making our next major move by expanding our presence to Europe. The acquisition of SHG certainly sets us strategically to target new growth opportunities in the world’s largest chocolate consuming market,” said Guan Chong managing director and chief executive officer Brandon Tay Hoe Lian in a separate statement.

“The latest move is ideal as we aim not just to enlarge our global client base, but also expand our range of value-added downstream industrial chocolate products to supply to major chocolate players.

“Additionally, SHG will require about 40% to 50% of the supply of cocoa ingredients from our upcoming cocoa processing plant in Ivory Coast. This ensures that our incoming new cocoa grinding capacity will be met with immediate demand,” he added.

In September, Tay told The Edge in an interview that size is important to the group. “There are still areas where we don’t have a presence and we need to go [there],” he said, noting that the group does not have a cocoa bean processing plant in the US, Europe and South America.

Earlier in August, the group had announced that it was investing €60 million (RM278 million) in a new cocoa bean processing plant in Ivory Coast – its first plant in Africa. “As of September 2019, land preparatory works have commenced, with commissioning expected in the first quarter of 2021,” said Guan Chong.

Guan Chong shares closed down 3 sen or 1.03% at RM2.89 today, bringing a market capitalisation of RM2.91 billion.

Source: The
Edge Markets