Toridoll Holdings Corp., Japan’s largest operator of noodle restaurants, took a beating in the stock market as investors shunned the company’s plan to take over the Tam’s Yunnan Rice Noodles chain in Hong Kong.
Shares of the Kobe-based company fell as much as 10 per cent, their biggest intraday decline in seven months, dropping to 2,673 yen on the Tokyo exchange, wiping out 9 billion yen (US$80 million) of market value in a day.
The Japanese company, which owns the Marugame Seimen chain of udon restaurants, said it has signed an agreement to buy 100 per cent of Hong Kong’s Jointed-Heart Catering Holdings, which operates as many as 50 Tam’s Yunnan Rice Noodles outlets in the city.
Toridoll wants to use Tam’s Noodles as a springboard to expand into mainland China, and around Southeast Asia to meet its target of operating 6,000 restaurants by 2025, becoming one of the world’s top 10 restaurant brands, the company’s spokesman said in an earlier interview with the South China Morning Post.
The purchase price wasn’t disclosed, but Japan’s Nikkei reported that Toridoll was likely to pay 15 billion yen (HK$1 billion) for Tam’s.
The price, and the lack of financial details surrounding the takeover unnerved investors, causing them to dump the stock. As many as 2.15 million shares changed hands Tuesday, more than four times the daily average in the past year.
“There is very little information about Tam’s Noodles,” said Nomura Securities’ analyst Ryozo Minagawa, who had been maintaining a “buy” recommendation on the stock since October 25 last year. “Most Japanese have never heard of this Hong Kong noodle chain.”