Malay business group wants Najib to keep KFC Bumiputera
KUALA LUMPUR, Dec 22 – The Malay Chamber of Commerce Malaysia (MCCM) said a Johor state unit’s proposed privatisation of KFC Holdings would erode Malay economic interests, and today threatened a political backlash in the Umno stronghold state if the deal is sealed.
MCCM President Syed Ali Alattas, who is also a senior member of Umno Johor said the public would not support the state leadership of Johor, which controls KFC through the state investment agency Johor Corp, if the latter deviates from its purported mission of boosting bumiputera economic interests and accumulates more debt in order to privatise KFC.
“I hope Prime Minister Datuk Seri Najib Razak will intervene,” he told a press conference. “I personally will not support the leadership of Johor if it allows this.”
He also pointed out that MCCM would be going on a nationwide roadshow together with Malay economic NGOs starting February and warned that there would be “fireworks” if KFC was privatised.
“In my letter to the prime minister, I said that there will be questions about this (KFC’s privatisation) during the roadshow,” he said.
Johor Corp (JCorp) had recently proposed to take KFC private together with its foreign joint venture partner CVC Capital Partners through a special purpose vehicle – Massive Equity Sdn Bhd – of which JCorp will own 51 per cent. It is due to make a statement about the deal today.
Syed Ali claimed that the privatisation was just a prelude to a
potential outright sale of the lucrative fried chicken franchise.
The MCCM chief noted that JCorp had late last year explored selling KFC to help pay off its substantial debts and said that once KFC was delisted from the stock exchange, deals could be done in private and away from the eyes of the public.
Syed Ali said that he supported a reported offer by Felda to buy over JCorp’s stakes in KFC as Felda was seen as a Bumiputera institution.
The business association’s latest outburst is not unusual in Malaysia where economics and race have been highly politicised and many businesses and projects risk becoming political football.
In May this year, MCCM has asked the government to hand over the MyMRT project to them, saying today Bumiputera contractors are finding it hard to bid for tenders.
The government later announced that 43 per cent of the MRT works would be reserved for Bumiputera businesses.
Syed Ali said that JCorp’s debts – reported to be RM3.6 billion – could be resolved if federal GLCs pooled their resources together to buy the state investment agency.
He also suggested that a holding company – of which 30 per cent of equity would be from non-Malays – be formed to take over JCorp and settle its debts.
The MCCM president also insisted that KFC should allocate franchises to 3,000 entrepreneurs of which 70 per cent be bumiputeras.
JCorp owns 53 per cent of Kulim Bhd, which in turn has a 57.5 per cent stake in QSR which holds 50.6 per cent of KFC.
JCorp and international private equity firm CVC Capital proposed on December 14 to privatise KFC and QSR for an estimated RM5.24 billion, which works out to RM4 per KFC share and RM6.80 per QSR share.
The independent directors of both QSR and KFC yesterday approved the buyout offer and the companies will have to call an EGM where at least 75 per cent of non-interested shareholders will have to vote for the deal in order for it to go through.
KFC operates over 600 stores in Malaysia, Singapore, Brunei and India and reported pre-tax profits of RM221 million on sales of RM1.88 billion last year.