Wilmar acquires 50% stake in Aalst Chocolate

Analysts believe the transaction will be funded internally.

Wilmar International gets a taste of chocolate after it acquired a 50% stake in Aalst Chocolate Pte Ltd (Aalst Chocolate).

According to DBS Equity Research, the remaining 50% stake will be held by Aalst Chocolate’s CEO and founder Richard Lee, co-founder and managing director Connie Kwan.

Currently, Aalst Chocolate is the only Singapore brand that can make both chocolate covertures and compounds.

It also exports 98% of its products to industrial and food service sectors in over 45 countries.

The acquisition was done through purchase of shares from existing shareholders, such as International Chocolate & Coca Holdings Pte Ltd, Richard Lee and Connie Kwan, along with some newly subscribed shares.

Here's more from DBS Equity Research:

The acquisition details, as well as financials of Aalst Chocolate are scarce, though we understand that Aalst Chocolate has “one of the most cutting edge” manufacturing plants in Singapore having invested ~S$40m to date.

We believe the transaction will be funded internally given the strength of Wilmar’s balance sheet. As at end-2Q17, Wilmar’s adjusted debt to equity ratio stood at 0.31x with free cash flow of US$282m.

According to Wilmar and Aalst Chocolate, the joint venture allows both companies to further the existing supplier-customer relationship.

Aalst Chocolate will be able to leverage on Wilmar’s vast manufacturing and distribution network in Asia and penetrate further into China, a rapidly growing chocolate market, and expand into new geographies. For Wilmar, this signifies its foray into a new consumer product segment - chocolate.