Millennium Group, formerly known as Allied Industries International, says it has bought a 25 per cent stake in tobacco company Worldwide Golden Leaf, the global distributor of China's top selling cigarette brand, in a deal worth $264 million.
The company said it had reached agreement on the purchase with the tobacco company's 100 per share shareholder, Yanuar Joeng.
Millennium, which has interests in chemicals, building materials, consumer products and transport operations, will issue 80 million new shares at $3.30 a share to Mr Joeng, representing 8.2 per cent of its enlarged share capital. The deal will be completed on or before June 16.
Mr Joeng has guaranteed that the net profit of Golden Leaf for the year to March 31, 1998 will be not less than US$30 million.
The sale price represents a multiple of 4.544 times those prospective earnings.
If Golden Leaf fails to meet the guaranteed profit, Mr Joeng will need to make up the shortfall in cash or with more shares in Golden Leaf.
Worldwide Golden Leaf is a tobacco maker and licensed distributor of China's number one brand of cigarette, Hongtashan, outside the mainland. Its sales network includes North, South and Central America, Vietnam, Burma, Cambodia, Laos, Nepal and Indonesia.