SDS Group seeks shareholder approval for RM101.7m Johor land acquisition to support planned manufacturing expansion

PETALING JAYA (July 31): SDS Group Bhd is seeking shareholder approval for its proposed RM101.7 million acquisition of a 143,157 sq m freehold land parcel in Tebrau, Johor Bahru, which will support the group's planned manufacturing expansion.

The proposal via a Bursa Malaysia filing on Friday (July 31) and detailed in a circular to shareholders issued relates to the acquisition by its wholly owned subsidiary, London Bakery Sdn Bhd, of the land from Kempas Green Development Sdn Bhd for a cash consideration of RM101,701,710.

The purchase price was negotiated on a willing-buyer willing-seller basis after taking into account an independent valuation of RM102 million, slightly above the RM101.7 million purchase consideration, as well as the strategic rationale for the acquisition and the property's prospects.

SDS said the land — a freehold parcel held under Geran 29534, Lot 900, Mukim Tebrau, District of Johor Bahru, Johor, located off Jalan Kempas Lama in Johor Bahru — is directly opposite the group's existing operational facilities, allowing it to integrate future manufacturing operations with its current production base to improve logistics, resource sharing and operational efficiency.

The group intends to construct a new manufacturing facility on the site, equipped with purpose-built production lines, machinery and equipment for the production and packaging of its products. It intends to undertake the proposed development within five years from shareholders' approval, or such later date as the board considers appropriate, subject to land-use conversion and the necessary regulatory approvals.

Financing backed by borrowings and internal funds

The acquisition will be funded through a combination of bank borrowings and internally generated funds, with about 85% of the purchase consideration expected to come from borrowings and the balance from internal funds. As at March 31, 2026, the group had RM30.81 million in cash and bank balances against RM3.3 million of bank borrowings.

The circular noted that the cost of developing the proposed manufacturing facility has yet to be determined, pending feasibility studies covering the facility layout and construction costs. The project may also be implemented in phases, depending on the group's financial capacity and operational requirements.

Residential zoning to be converted

Although the freehold land does not specify a land-use category on its title, it is currently zoned for residential use by Johor Bahru City Council.

The group will need to obtain approval to convert the land's zoning from residential to industrial before proceeding with the manufacturing facility. The land conversion premium has yet to be determined and will only be assessed after the relevant application is submitted to the local authority.

Acquisition tied to adjacent land sale

The proposed acquisition is not conditional on any other corporate exercise but remains inter-conditional and inter-dependent with the sale of an adjacent 7.54ha parcel to MTAG Land Sdn Bhd.

Under the arrangement, both transactions must be completed simultaneously on an en-bloc basis. SDS said despite this condition, it considers the site a strategic opportunity because of its size and immediate proximity to its existing manufacturing operations, noting that comparable land parcels near its facilities are unlikely to be readily available.

The board said the proposed acquisition is in the best interests of the group and recommended shareholders vote in favour of the resolution at the Aug 28 extraordinary general meeting.

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