Kumpulan Perangsang Selangor Berhad (“KPS Berhad” or the “Company” or the “Group”) (KPS, Bursa: 5843; Bloomberg: KUPS:MK; Reuters: KPSB.KL) announced yesterday that its wholly owned subsidiary, Bold Approach Sdn Bhd (“Bold Approach”) has entered into a conditional share sale agreement (“SSA”) with AI Dream (HK) Limited to divest its 50% equity interest in Kaiserkorp Corporation Sdn Bhd (“Kaiserkorp”). Bn KPS Berhad is expected to realise approximately RM265.48 million from the divestment.
HISTORY
King Koil is a globally recognised and venerable brand with a legacy of success with more than 100 years of history, dating back to 1898 under the name of United States Bedding. The company initially gained recognition for its handcrafted mattresses, characterised by quality craftsmanship. In 1930s, United States Bedding introduced the King Koil brand, emphasising luxurious comfort and durability.
In 2016, KPS Berhad acquired for RM116.66 million 60% interest in Kaiserkorp, whose subsidiary owns the King Koil mattress brand and related intellectual properties (the “Kaiserkorp Group”). The acquisition marked KPS Berhad’s first foray into the global business sphere with opportunities to penetrate high-growth international markets.
VALUE CREATED
Following the acquisition in 2016, the Kaiserkorp Group had recalibrated its licensing strategy, opting to reclaim territories in the United States of America (“U.S.”) by strategically dismantling domestic territorial exclusivity agreements. In 2018, the Kaiserkorp Group continued methodical expansion efforts to enhance the brand’s presence and brand recognition further, seeking capable and credible partners in broader markets.
As part of the strategy already earmarked upon the Kaiserkorp Group’s acquisition, KPS Berhad subsequently announced to reposition its mattress business in the U.S. market, gradually taking over product distribution while developing in-house manufacturing capabilities – in 2018, the Kaiserkorp Group’s manufacturing arm was formed to undertake the manufacturing and distribution of mattresses and related sleep products. This manufacturing arm, which operates out of Phoenix, Arizona, was established with the aim of providing the Kaiserkorp Group with better control over product standards while facilitating direct access to regions with high spending on bedding products in the U.S. market.
The strategic change in business positioning from brand licensing to becoming an owned-and-operated manufacturer was aimed at bolstering revenue and growth potential, by broadening the base from licensing royalty revenue to also capture wholesale revenue via the manufacturing and sale of products directly to retailers. The Kaiserkorp Group also took the initiative to rebrand itself by including premium and environmentally friendly product range, a market segment expected to be inelastic to the fluctuation in consumer sentiment.
The King Koil brand continues to incorporate cutting-edge materials and design innovations to meet the ever- changing demands of consumers. Today, King Koil is recognised not only for its heritage but also for its dedication to crafting high-quality mattresses that prioritise comfort, support, and rejuvenating sleep experience around the globe.
KPS Berhad’s Managing Director/Group Chief Executive Officer, Ahmad Fariz Hassan, said:
“KPS Berhad has built a healthy relationship with the Kaiserkorp Group in setting the business strategy to push for growth, encouraging collaboration between both leaderships in capitalising business opportunities such as market and customer base expansion. Over the years, the Kaiserkorp Group has strengthened its foothold in the bedding industry, with the presence through 24 international licensees in almost 80 countries and achieved an impressive revenue and profit growth CAGRs of 30% and 19%, respectively, for the period between 2018 and 2022.
The decision to monetise our investment in Kaiserkorp follows a comprehensive review of the Group’s business, demonstrating its active approach to investment management. It is a strategic move with a few aims in mind, which are streamlining our core business and serving as a catalyst for debt reduction, with the generated proceeds directed towards optimising our balance sheet. This financial manoeuvre is designed to enhance the Group’s fiscal stability and resilience.
With the new ownership having vast business exposure and deep sector experience, there would be bigger growth plans for the Kaiserkorp Group, helping it thrive stronger for the long term on a higher growth trajectory, whilst creating lasting value for its stakeholders. Retaining a 10% stake would provide KPS Berhad with potential financial upside to its investment whilst maintaining a connection to future growth, potentially yielding additional returns over time.”
SPECIAL DIVIDEND
KPS Berhad’s Board has allocated RM24.2 million of the total proceeds for the issuance of special dividends. The entitlement and payment dates of the dividends will be announced later, following a successful conclusion of the proposed divestment, which is conditional upon approval of KPS Berhad’s shareholders at the upcoming extraordinary general meeting. Subject to the completion of the proposed divestment, its shareholders will be entitled to receive 4.5 sen per ordinary share as an appreciation for their steadfast support of KPS Berhad’s strategic initiatives.
