Why MINT is still unlikely to take over Bread Talk Group

BTG chairman's 53% stake is a stumbling block.

Recently, Minor International (MINT), a Thailand-based hospitality business, increased its stake in BreadTalk to 10%. This lead to some speculations that MINT is likely to take-over BreadTalk. 

However, analyst OCBC Investment Research noted  that a takeover at this juncture is an unlikely scenario. It added further that according to management, these recent share purchases by MINT have been unsolicited.

Here's more from OCBC:

Firstly, BreadTalk's chairman, George Quek, holds about 53% of the company along with his wife, and this is a stumbling block for any general offer. In addition, BreadTalk is far from being a polished product so any acquisition will encompass significant risks.

For instance, its operating margins have narrowed due to ongoing expansion but the pace of their declines has led to some concerns over future margin stability when BreadTalk does approach a steady state.  

From our review of its operations, BreadTalk is still at least five years away from its stated goals. Its management also has to show that
it is able to deliver healthier growth to its bottom-line beyond just impressive doubledigit revenue growth.

Failure to do so will result in the perception that BreadTalk is operational deficient, and this will dilute its appeal to suitors or result in an unfavourable valution.