Investment Highlights

• Proposed takeover offer at RM3.18 per share

• Intention to delist and privatise Oldtown

• Opportunity to realise at an attractive premium

• Recommend to accept the offer

Proposed takeover offer at RM3.18 per share. Oldtown has received a pre-conditional cash offer for all its issued ordinary shares by Jacobs Douwe Egberts Holdings Asia NL. B.V., an indirect whollyowned subsidiary of Jacobs Douwe Egberts B.V. (JDE) at RM3.18 per share which represents a 10.42% premium over the last transacted price of RM2.88 on 7 December 2017. This represents a total aggregate consideration of approximately RM1.47b. JDE is based in the Netherlands and primarily involves in manufacturing and distribution of consumer packaged coffee products worldwide with annual revenue of €5b.

Shareholders of 51.45% holding will tender all their shares. Shareholders of Oldtown namely Old Town International Sdn Bhd, Mr Lee Siew Heng (a director of the group) and Mawer Investment Management Ltd which in total have a holding of approximately 51.45% of the total issued share capital are in full support of the transaction and have irrevocably undertaken to tender all of their shares in acceptance of the offer.

Intention to delist and privatise Oldtown. JDE intends to delist and privatise Oldtown upon completion of the takeover as it will provide greater control and management flexibility in the implementation of any strategic initiatives and operational changes of JDE and Oldtown as well as to dispense the compliance costs associated with maintenance of listed status. The offer will not be made unless and until all the pre-conditions have been satisfied on or before 11 August 2018.

In need of expertise to address future challenges. Oldtown is currently facing a tougher outlook going forward due to the: (i) challenging outlook for its café outlet operation with the reduction in the number of local outlets and; (ii) tapering growth of the manufacturing of beverages’ segment in light of the stronger Ringgit as this will have a stronger downside impact on export sales than the benefit gain from a lower raw material costs.

Source: MIDF Research - 12 Dec 2017