Pan Malaysia buys 51% stake in A&W to enter QSR scene

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Pan Malaysia has entered into an agreement with Inter Mark Resources to buy a 51% stake in A&W Malaysia. The proposed acquisition is currently valued at RM21 million and allows Pan Malaysia to expand and diversify its revenue and earnings base from the mainly chocolate and confectionery business into the rapidly growing QSR business.

According to the Bursa filing, the completion of the sale is conditional upon Inter Mark receiving consent from A Great American Brand International to terminate the international franchise agreement and the development agreement both dated 1 July 2019.

It is also conditional upon the execution of a new international franchise agreement and a new development agreement between A Great American Brand International and A&W Malaysia, as well as Inter Mark managing the business of A&W on terms and conditions to be agreed among Inter Mark, A&W Malaysia and Pan Malaysia.

Upon completion of the acquisition, Pan Malaysia will hold 51% stake in A&W Malaysia while Inter Mark will retain the remaining 49%. A&W Malaysia will be the master developer and exclusive franchisee of the A&W franchise in the country. The fast-food chain currently operates 62 outlets in Peninsula Malaysia, of which more than 50% are located in Kuala Lumpur and Selangor. According to the filing, the potential to expand to other locations outside of Klang Valley remains vast. A&W targets having 100 outlets by 2023 and emerge as one of the top three QSR operators in the country.

The country's food service sector is expected to grow from RM64.9 billion last year to RM109.08 billion in 2025 at a compound annual growth rate of 10.9%, the Bursa filing said. The QSR channel recorded the slowest decline among all the food service channels during 2015 to 2020 at a CAGR of just 0.05%.

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