SINGAPORE (Sept 17): BreadTalk Group has announced that it will not be convening an extraordinary general meeting (EGM) to seek shareholders’ approval for its proposed $80 million acquisition of Food Junction Management.

In a bourse filing on Tuesday, BreadTalk says that in response to its waiver application, SGX has advised that it has “no objection” to the company’s view that the proposed acquisition is “in the ordinary course of business”. As such, shareholders’ approval is not required.

See: BreadTalk buying over Food Junction for $80 mil from Auric Pacific

BreadTalk says its board of directors believes there will be no material change in the risk profile of the company arising from the proposed acquisition.

“The group’s existing core business includes the operation of food courts and F&B outlets which is similar to that of [Food Junction Management],” it adds.

The proposed acquisition would make BreadTalk the third-largest foodcourt operator in Singapore, behind NTUC Enterprise and Koufu.

However, some analysts have pointed out that the $80 million price tag is too high for a company whose net tangible assets are valued at only about $12.3 million.

See: Will BreadTalk's $80 mil acquisition of Food Junction be too hard to swallow?

“Valuation seems too expensive at a price-to-book ratio (P/B) of close to 6.7 times, especially when compared to peers like Koufu and Kimly, which are trading at 3.7 times and 2.8 times FY19F P/B respectively,” says Juliana Cai, an analyst at RHB Group Research, in a report earlier this month.

“Based on the headline numbers, we think the acquisition is too expensive and earnings dilutive,” she adds.

DBS Group Research analyst Alfie Yeo also notes that Food Junction reported a net loss of $1.7 million in FY18. And for the first half of FY19, the foodcourt operator had recorded earnings of just $3,183.

Shares in BreadTalk closed 1 cent lower, or down 1.6%, at 63 cents on Tuesday before the announcement.