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Pelikan, a Malaysia-based stationery company, may be taken private by private equity firm Texas Pacific Group (TPG), said senior vice president of corporate planning Ng Cheong Seng.
”We’re talking to TPG right now. Nothing is confirmed as we’re exploring ways to structure the privatisation. We’re not desperately looking for a buyer, we’re committed to grow the business more,” he said. The take-private would be for MYR 1bn (USD 305m) -- a multiple of price-to-earnings of 8x to 9x -- and would be undertaken by TPG and other suitable investors. ”For investors who want short-term gains, sorry, we’re not interested,” said Ng.
TPG declined to comment.
The plan, first explored in 2005, is fluid and has no deadline for completion, Ng said. It would allow the company the flexibility to focus on long-term goals, rather than managing quarter-to-quarter earnings expectations, he explained. For instance, it would allow Pelikan to leverage TPG’s network to grow its markets organically and through mergers and acquisitions in North America and Europe.
Indeed, Pelikan is already speaking with targets in China, Germany and Canada, Ng said, and privatization would help pave the way for Pelikan’s ambitious acquisition plans.
In Asia, the company is planning to set up a listed special purpose acquisition vehicle (SPAC) in Hong Kong to acquire Chinese stationery companies at a cost of up to MYR 300m (USD 93.13m) each, this news service has previously reported.
On the German front, Ng said Pelikan was currently in talks to buy writing instrument companies Montblanc and Faber Castell. Luxury pen maker Montblanc is owned by Swiss luxury goods maker Richemont. ”Pelikan could potentially move into the area of luxury branding, which would need investments, spin-off the luxury division or refocus on the luxury brand,” Ng noted, adding that if Pelikan acquired Montblanc the aim would be to take the company public on the London stock exchange.
Regarding Faber Castell, Pelikan expects hurdles from Faber Castell shareholders. ”The company is owned by trust funds. It’s going to be difficult,” Ng explained.
European bankers, however, were sceptical that Montblanc would sell to Pelikan, and a spokesperson for Faber Castell denied it was in talks with Pelikan. While considerable speculation has surfaced since Richemont started restructuring its portfolio of assets, most of it tends to be ”wide of the mark,” one banker familiar with Richemont explained. A German-based banker also questioned whether this was the moment to make a play on Montblanc, given its good performance.
Neither Richemont nor Montblanc returned calls seeking comment.
Meanwhile, in North America, Ng said Pelikan had placed a bid this week to acquire the stationery division of a listed Canadian company. The division has USD 200m in revenues, he added, and the acquisition would give Pelikan a foothold in the US stationery market, especially in shelf space at retail outlets. ”We’re interested to buy but couldn’t put in a specific bid price because we didn’t have enough information on the asset’s value.” A SPAC would be created in North America to acquire the company, he added.
A North American industry banker and analyst were unaware of any potential deals in the works, but suggested listed OfficeMax’s stationary division Grand & Toy could be a match. ”Anyone who wants to get into the Canadian or US market will definitely benefit from acquiring Grand & Toy. They are probably the largest supplier in Canada,” the banker said. An industry analyst noted that OfficeMax itself had recently been named as a potential target in light of the sale of rival Corporate Express to Staples, and could look at divesting Grand & Toy as a way to make itself more attractive to potential acquirers.
Spokespeople for OfficeMax and Grand & Toy were not available for comment.
Pelikan has manufacturing hubs in Germany, Mexico, Malaysia, China, Scotland, Switzerland, Czech Republic and Bosnia. About 86.2% of its 2007 revenue came from the European market, 8.8% from Americas and the remaining 5% from Asia, Middle East and Africa, according to its annual report. Pelikan recorded revenues of MYR 1.19bn (USD 363.06m) in 2007. Net profit stood at MYR 96.17m (USD 29.4m).
Pelikan’s president and chief executive officer, Loo Hooi Keat, and other existing shareholders have no plans to dilute their shareholdings following the proposed privatisation, Pelikan’s Ng said. Loo has approximately 28% direct and indirect equity interest in Pelikan as of 15 April 2008. According to Pelikan’s 2007 annual report, other substantial shareholders include Arisaig Asean Fund (7.23%), Goldman Sachs International (9.28%), and Malaysia’s pilgrimage fund Lembaga Tabung Haji (8.85%). Pelikan has a 33% public spread.
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