CVC, Johor, bid $1.6bn for Malaysia fast-food giant

CVC Capital Partners and the investment arm of the Malaysian government, Johor, have bid to buy fast-food chain operator QSR, which manages KFC in Malaysia.

CVC and Johor, a Malaysian state-backed investment vehicle, have submitted a joint take-private bid worth $1.6 billion for the Malaysian arm of fast food chain KFC and its parent company QSR, according to statements on Bursa Malaysia, the Malaysian stock exchange website.

The investment companies are offering MYR4 (€0.9; $1.2) per share for KFC (Malaysia) Holdings, a premium of 17 percent to its last market price of MYR3.41 before its shares were suspended on Tuesday.

For QSR, they offered MYR6.80, which represented a 13 percent premium to the MYR6 it was last trading at before suspension. 

The QSR offer will go ahead subject to approval of shareholders and the KFC offer becoming unconditional. The board are currently deliberating over the offer and have until 21 December to reach a decision according to the company announcement. 

QSR is no stranger to private equity bids, having received an offer from private equity firm The Carlyle Group earlier this year. In November last year, sister publication PE Asia reported that its MYR1.94 billion (€464.2 million; $618.9 million at the time) offer to buy fast food restaurant operator QSR from parent company Kulim was rejected.

Carlyle had offered to pay RM6.7 per share to acquire all of QSR, which topped an earlier bid of RM5.60 a share offered by Malaysian businessman Halim Saad, but was still deemed inadequate by the Kulim board. 

Listed on the Bursa Malaysia in April 2004, QSR operates more than 530 KFC restaurants in Malaysia, Singapore, Brunei and Cambodia, and approximately 230 Pizza Hut shops in Malaysia and Singapore.

The CVC / Johor offer equates to a price-earnings ratio of 20 times for KFC and 17 times for QSR based on 2010 profits, according to Bloomberg calculations. The companies' shares resumed trading again on Wednesday. CVC and Johor could not be reached before press time. 

The Asian food service sector is becoming highly popular for private equity firms. In November, Morgan Stanley Private Equity Asia bought a majority stake in Korean restaurant franchiser Nolboo, not long after Bain Capital had acquired Japanese restaurant chain Skylark in a deal worth $2.1 billion.

The Blackstone Group also made its first foray into New Zealand by acquiring Burger King operator Antares Restaurant Group. Over the summer, Apax Partners acquired Chinese buffet restaurant chain Golden Jaguar for $250 million, and Archer Capital bought Quick Service Restaurant Holdings for around A$450 million (€342 million; $444 million).