Singapore, April 27, 2011 – SATS Ltd. announced today that it has through its wholly-owned subsidiary, SATS Investments Pte Ltd, completed the acquisition of a 40% equity stake in Adel Abuljadayel Flight Catering Company Limited (AAFC) for US$18.5 million (approximately S$23.1 million).
The purchase consideration was negotiated with the existing shareholders of the Saudi Arabian company on a willing-buyer, willing-seller basis. It was based on an independent valuation using a number of methodologies including the discounted cash flow analysis. The consideration has been fully paid in cash using internal resources.
Established in 1982, AAFC is a niche inflight caterer, serving mainly private jets and Hajj charters. It also serves international airlines such as Cathay Pacific Airways and Malaysia Airlines. AAFC has two catering facilities located at King Abdulaziz International Airport in Jeddah and King Khalid International Airport in Riyadh, with a total production capacity of 8,000 meals per day. In 2010, AAFC reported a revenue of about US$11 million.
Said Mr Clement Woon, President and Chief Executive Officer of SATS: “The acquisition of a meaningful minority stake in AAFC is part of our strategic thrusts to leverage our core competencies to access attractive opportunities and grow our footprint in the Middle East. Given AAFC’s presence in Saudi’s two busiest airports which have a combined traffic exceeding 30 million passengers and 270,000 flights, SATS is able to access Saudi’s private jet, Hajj and airline catering services market and potentially develop new service opportunities with our key customers at more locations.”
Following the completion of this acquisition, AAFC has become an associated company of SATS with immediate effect. As part of the agreement between the shareholders, SATS has appointed three executives for the key positions of chief executive officer, chief financial officer and executive chef in AAFC.
This acquisition is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of SATS in the current financial year ending March 31, 2012.
