SDS Group’s RM101.7m Johor Bahru land deal becomes unconditional

PETALING JAYA (Aug 28): The sale and purchase agreement (SPA) for SDS Group Bhd’s (KL:SDS) RM101.7 million proposed acquisition of a 35.37-acre freehold parcel in Johor Bahru has become unconditional after shareholders approved the deal.

The bakery and food-products manufacturer said in a Bursa Malaysia filing on Friday (Aug 28) that shareholder approval obtained at an extraordinary general meeting (EGM) that day was the final condition precedent under the SPA, resulting in the SPA becoming unconditional on the same date.

SDS Group’s wholly owned subsidiary London Bakery Sdn Bhd has agreed to acquire the land from Kempas Green Development Sdn Bhd for RM101.70 million in cash.

New manufacturing facility planned

SDS Group intends to develop a new manufacturing facility on the site, fitted with purpose-built production lines, machinery and equipment for producing and packaging its products.

The land is directly opposite the group’s existing operational facilities. SDS Group said the location is expected to improve logistics and operational integration, including through shared warehousing and support functions, as well as better coordination of production and packaging activities.

The group said the acquisition forms part of its longer-term plan to expand production capacity. At its existing Kempas facilities, utilisation rates across its bun, filled bun, cream roll and cake production lines ranged from 85.06% to 92.86% for the financial year ended March 31, 2026.

SDS Group intends to undertake the proposed development within five years from shareholders’ approval, or such later date as its board considers appropriate, subject to the required land conversion and other regulatory approvals.

Feasibility studies on the facility layout and construction costs are ongoing, while the group has yet to determine the total development cost. The project may also be implemented in phases.

Residential-zoned land requires conversion

The 143,157.32 sq m parcel, equivalent to about 35.37 acres, is held under Geran 29534, Lot 900 in Mukim Tebrau, Johor Bahru.

It is located off Jalan Kempas Lama within Taman Perusahaan Ringan Pulai, about 12km north-west of Johor Bahru city centre.

While the title does not specify a category of land use, the property is zoned for residential use under the applicable land zoning designated by Johor Bahru City Council (MBJB). SDS Group intends to apply to convert the zoning to industrial use for its proposed manufacturing facility.

The group will also need planning permission, approval for building plans and other requisite approvals before commencing the proposed development.

SDS Group said it could not yet estimate the land conversion premium, as the amount will only be determined by MBJB after the relevant application is submitted and assessed.

The RM101.70 million purchase price was agreed on a willing-buyer willing-seller basis and is marginally below the property’s RM102 million market value as at March 6, 2026. The valuation was prepared on an as-is-where-is basis using the comparison approach.

85% of price to be debt-funded

SDS Group intends to fund 85% of the purchase price, or about RM86.45 million, through bank borrowings, with the remaining 15% to come from internally generated funds.

The funding structure is indicative. The final mix will depend on financing terms, the group’s cash flow and working-capital requirements, available internal funds and gearing at the relevant time.

About RM10.17 million, representing 10% of the purchase price, has already been paid. The remaining RM91.53 million is payable within three months from the date the SPA became unconditional.

The SPA allows for an automatic two-month extension, subject to interest at 8% per annum, calculated daily, on the outstanding balance.

The proposed acquisition is inter-conditional and inter-dependent with MTAG Land Sdn Bhd’s purchase of an adjoining 7.54-hectare, or about 18.63-acre, parcel from Grand Focus Sdn Bhd. The two transactions are required to be completed simultaneously on an en-bloc basis.

In its July 31 circular, SDS Group set out a tentative fourth-quarter 2026 completion timetable, barring unforeseen circumstances and subject to the required approvals. The Aug 28 announcement confirming the SPA’s unconditionality did not provide a revised completion date.

..........

EdgeProp monthly brings you data, insights and solutions for an evolving market. Subscribe now for your free copy!