Singapore, Dec. 20, 2010 – SATS Ltd. today announced that its wholly owned subsidiary, SATS Investments Pte Ltd (SIPL), has completed the acquisition of Japan Airlines International Co., Ltd’s (JALI) entire stake of 50.7% in TFK Corporation (TFK).
The purchase consideration of ¥7.8 billion (approximately S$122 million) was fully satisfied in cash and funded through debt. Following the completion, SIPL now owns 504,195 shares in TFK and has voting rights of 53.8%. TFK and its subsidiaries, namely K.K. Inflight Foods, Narita Dry Ice K.K., New Tokyo Service K.K., Tokyo Flight Kitchen Restaurantes LTDA and TFK International (N.Z) Limited, have become subsidiaries of SATS with immediate effect.
Said Mr Clement Woon, SATS President and Chief Executive Officer, “We warmly welcome TFK into the group. Both Japan’s primary air hubs at Narita and Haneda are undergoing an exciting phase of growth and TFK’s presence at these hubs will strengthen SATS’ inflight catering business. We remain committed to the aviation food solutions business and look forward to serving our key customers at these new SATS’ locations.”
Financial Impact
The purchase price implies an enterprise value of TFK at ¥16.3 billion, which translates into an EV/EBITDA multiple of 9.4 times based on TFK’s audited EBITDA for FY2009-10. This compares to the average of 11.6 times implied by historical EV/EBITDA multiples paid in reference transactions involving Japanese food and food services companies over the last 3 years.
For the financial year ended March 31, 2010, TFK attained revenue and EBITDA of ¥22.6 billion (approximately S$353 million) and ¥1.7 billion (approximately S$27 million) respectively.
For the current financial year ending March 31, 2011, the acquisition is not expected to have any material impact on the SATS Group’s earnings per share and net tangible assets per share. It is expected to be earnings accretive after the first full year of consolidation.
