SUPERMARKET chain Sheng Siong entered into a conditional sale and purchase agreement on Friday (Sep 27) to acquire real estate development company Jelita Property.
The private limited company owns eight strata units at freehold condominium Siglap V, located on 2 First Street, as well as the leasehold interest of 78 years of a property located in Toa Payoh Central.
The shop space at Block 181 Lorong 4 Toa Payoh was recently vacated by rival supermarket chain Giant, which closed its store there on Sep 15.
In April, it was reported that DFI Retail Group was selling these two properties – its last in Singapore. Seven of the eight adjoining freehold retail units at Siglap V are occupied by the group’s CS Fresh supermarket brand, with the remaining unit held by the group’s health and beauty brand, Guardian.
The proposed acquisition comprises a leaseback agreement involving these eight strata units.
Under the agreement, Sheng Siong will buy 25 million ordinary shares representing 100 per cent of the issued and paid-up capital of Jelita Property.
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The proposed acquisition will be financed with Sheng Siong’s internally generated funds, the group said on Friday. The move will allow the group to open additional stores, receive extra rental income from the leaseback agreement, and gain long-term capital appreciation from the assets, it added.
It also said that the proposed acquisition is in line with its strategy to operate supermarkets in areas where its potential customers reside.
The purchase consideration is the net asset value of Jelita Property, adjusted on the basis that the value of its properties is fixed at S$50.2 million.
Sheng Siong has made a 10 per cent, or S$5.02 million, deposit for the purchase. The remainder of the consideration will be paid upon the completion of the agreement on Oct 30, or otherwise decided.
The group made the deposit via an electronic bank transfer of S$502,000 on Jul 9, with the remaining S$4.518 million paid on Friday.
Shares of Sheng Siong closed Friday down S$0.01 or 0.7 per cent at S$1.50, before the announcement.
