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Kumpulan Perangsang Selangor Buys 60% Stake In King Koil Mattress Licence Holder

  • Kumpulan Perangsang Selangor has bought a 60 percent stake in the licence holder of the King Koil mattress brand, a company currently owned by Can-One’s director and major shareholder, Yeoh Jin Hoe, for a consideration of US$28.8 million (RM115.9 million).

  • The group notes that King Koil mattresses have been generating profits with margins of over 25 percent in earnings before interest, taxation, depreciation, and amortisation for five years up to 2014.

  • Half of the consideration will be paid via bank loans, amounting to RM55.9 million, raising the group’s gearing level to 0.07 times, from 0.02 times as at 31 December 2015. After the purchase, the group’s pro-forma interest-bearing borrowings will rise to RM86.47 million from RM30.1 million.

Significance: King Koil products are available in over 80 countries via agreements with 31 licensees and KPS is of the view that the brand licensing business model represent high growth potential growth, as the revenue is mainly derived from collection of royalty payments based on the terms of the licence agreements. The business also requires minimal capital expenditure in the future.