Lay Hong shares see rise on NHF tie-up

By Xavier Kong

Local poultry player Lay Hong Bhd saw its shares rise 36 sen to RM7.11 per share following the news of their share subscription agreement and the signing of a memorandum of understanding with Japanese firm NH Foods Ltd, which would allow Lay Hong to move into the SIngaporean and Japanese markets.

The tie-up with NHF involves the Japanese company subscribing to a 9% stake of Lay Hong, which the group will provide through a 10% proposed private placement exercise. The private placement exercise is expected to be complete by Jan 20, with the value of the shares placed at RM5.81 per share, for a total consideration of RM30.5 million.

Following this, the two groups have agreed to set up a joint venture via a memorandum of understanding, of which NHF would own 51% with Lay Hong owning the remainder. The memorandum of understanding, announced on the same day, would see Lay Hong responsible for the joint venture company’s operations in Malaysia, while NHF would be contributing their expertise in research and development, as well as in manufacturing processed foods. NHF would also allow Lay Hong to export to markets such as Singapore and Japan.

The joint venture company will have four members on the board, inclusive of the chairman. Both groups will nominate two members, with the chairman to be nominated from NHF’s representatives.

This follows the trading halt which was granted to Lay Hong on Jan 8, 2016.