Singapore-listed coffee shop operator Kimly Limited has decided to return Asian Story Corporation (ASC), the drinks manufacturer it recently acquired for S$16 million ($11.7 million), to its previous owner, due to recent developments, including investigations by deal regulators.
Kimly, through its wholly-owned unit LHL Group, acquired ASC in July this year from Wang Chia Ye. ASC markets and sells a variety of drinks under its Asian Story brand and bottled water under its Simply Water brand.
In a disclosure to the Singapore Exchange, Kimly said the decision to rescind the acquisition stemmed from the intention of Pokka Corporation (Singapore) to terminate its manufacturing agreement with ASC, prompting Kimly’s board to look into the potential impact.
Around the same time, the company said it received letters from the Commercial Affairs Department and the Monetary Authority of Singapore requesting documents as part of an investigation of a potential offence.
Kimly explained that the authorities have not disclosed to the company any further details of its investigation. The company assured that it will cooperate fully with the investigations.
“Taking into account the impact of the termination on ASC as well as other relevant factors, Kimly and LHL Group have on 29 November 2018 and on mutually agreed terms entered into a deed of rescission with the vendor and ASC to rescind the acquisition, as if the acquisition had not occurred,” the company said.
It further disclosed that Wang Chia Ye, the vendor, has repaid S$12,000,000 of the total purchase price to the company, with the balance to be repaid over three years. In return, Kimly has transferred all the shares of ASC back to the previous owner and LHL Group has rescinded its service agreement with the vendor.
Kimly also requested for the lifting of suspension and resumption of trading of company shares from today, Friday. Its stock was voluntarily suspended since Tuesday (Nov 27).
Kimly operates one of the largest chains of coffee shops in the city-state with a network of 64 shops, industrial canteens and food courts under management. It has 121 food stalls – selling dim sum, seafood “zi char”, mixed vegetable rice, teochew porridge and more – across the heartlands of Singapore.