Thai-listed Electronics Industry Pcl (EIC)’s wholly-owned subsidiary, Food Holding has acquired ordinary shares of Japanese restaurant operator’s Eastern Cuisine (Thailand) for 300 million baht, equivalent to US$9.38 million.
Post the approval to be received from the shareholders in June for the acquisition, the transaction will be completed before the end of the third quarter of this year’ according to EIC’s filing to the Stock Exchange of Thailand.
For the transaction, EIC is supposed to take a load of 200 million baht, of the remaining amount, 75 million baht will be obtained through sale of certain shares of EIC and the last 25 million baht will be obtained from the company’s internal cash flow.
If the transaction goes as planned, Food Holding will acquire eight of the Eastern Cuisine’s Kagonoya restaurants in Thailand. These restaurants have been quite popular for their Japanese-styled shabu shabu buffet dining in Osaka.
According to Kusol Sangkananta, the chief executive of EIC, the objective behind this acquisition is to ensure diversification of risk from operating electronic parts business and the rental of advertising space on out-of-home billboards, additionally with long- run stability creation. They estimate a 9-10 percent internal rate of return from Eastern Cuisine.
The sales revenue till date generated by Eastern cuisine according to the company’s internal audit information have amounted to 102.97 million baht (about US$3.21 million) and a net loss of 11.75 million baht (about US$366K) in 2018. The steps that will be taken by EIC once the acquisition takes place is to increase the marketing budget for Eastern Cuisine to 5% in 2019 from 1.5% in 2018 along with setting the growth rate to be equivalent to the inflation from 2019 onwards. The average number of bills per day is expected to increase from its current record of 18.6 to 40 by 2023.
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