Japanese company assured of 51% of Expolanka

Kassims will sell down further in event of shortfall

(L to R): Mr.Hanif Yusoof, Group CEO/Director, Expolanka Holdings PLC, Mr.Osman Kassim, Chairman, Expolanka Holdings PLC, Naosuke Kawasaki – Managing Director, Sagawa Holdings Global, Singapore, Nobuaki Kondo – Representative Director, Sagawa Holdings, Japan exchanging the share purchase agreements.

Japan’s SG Holdings which on Friday concluded a US$ 49 million deal (Rs.6.3 billion) on the Colombo Stock Exchange to buy 30% of the Expolanka Holdings PLC has been assured that they will be given a controlling stake of over 50% by the major shareholders of the company who retained 42.6% of Expolanka after Friday’s deal.

"There is an understanding that SG will get their 50% although there is no formal agreement on this matter," one sources said.

However there was a Stock Exchange filing later Friday which indicated that the Kassims have undertaken not to exercise their selling rights under the mandatory offer being made by SG Holdings except to make good any shortfall of the 51% control of the company.

If the public shareholders do not come up with the balance 21% needed to gain control, the Kassim family which on Friday sold down 5.75% each of the company with the group CEO, Mr. Hanif Yusoof selling 7% will further sell down to make good the difference, these sources said.

Four other directors, the brothers Osman Kassim, Satter Kassim, Shafik Kassim and Farook Kassim sold 5.75% each from their existing stakes while Yusoof who is related to the Kassim’s sold 7%.

SG Holdings, the buyer, was described in a Stock Exchange filing as a leading logistics company in Japan with a presence in the Asian region.

"With the view of consolidating its operations in Sri Lanka and strengthening its global presence, SG Holdings intends to purchase majority shares of the company in total once the mandatory offer is approved," the filing said.

Expolanka said that this far reaching and strategic deal would see both parties working towards growing and strengthening the company’s position in the global logistics industry.

Hanif Yusoof will continue as group CEO, it was announced in the Stock Exchange filing.

When Expolanka obtained a quotation on the CSE through an IPO, its shares were sold to the public at Rs. 14, less than the mandatory offer price of Rs. 10.70. But the cost per share to the majority shareholders would have been much less, analysts said.

``They are making a handsome capital profit on the deal and also retaining a fair slice of the company which the Japanese are expected to drive much faster than the founders could have,’’ one analyst said.

Commenting on the deal, Yusoof said: "With the Sri Lankan economy moving forward in the positive direction, there is a great potential for export growth as well as global expansion in the freight and logistics industry. In view of this, the partnership with SG Holdings will get us closer to our vision of being a strong freight and logistics player in the region.

"This was a very big decision for the top five shareholders as they have been part of Expolanka; managing the business over 30 years, and they felt that this partnership was important for the long term success of the organization.’’

Freight and logistics is a core business of Expolanka Holdings which has over the last three decades established itself as a premier provider of freight forwarding and supply chain management solutions in Sri Lanka and the Indian subcontinent with a cluster of companies focusing on multi-modal freight and transport solutions and a global footprint, spanning four continents and 18 countries.

SG Holdings currently owns 24 locally-incorporated subsidiaries in 10 countries outside Japan, including China, Vietnam, and Singapore. The Group has identified strengthening their overseas operation in the area of global freight forwarding as one of the core pillars.

Mr. Nobuaki Kondo, Representative Director of SG Holdings said, "We saw great value in Expolanka Holdings and especially the strength and the strategic fit in the freight and logistics business. This acquisition will certainly help Sagawa to further increase and strengthen our foot print in Asia."

"This move further endorses and supports our groups’ strategy of focusing on our core business of freight and logistics. We also believe that the Synergies that can be achieved through this new partnership will propel Expolanka towards achieving our objectives faster with a more focused & clearer vision" Yusoof concluded.

Expolanka Holdings PLClisted in the Main Board of the Colombo Stock Exchange as a diversified conglomerate commenced operations in 1978. With diversified interests in freight & logistics, travel & leisure, international trading & manufacturing and investments & services sectors, the Group, has a global presence in over 18 countries and 45 cities.

Expolanka Holdings PLC posted a consolidated revenue of Rs.50 billion in the FY 12-13. www.expolanka.com.

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