Wellspring to expand F & B business in Asia via SMTrack RTO

Tutti Frutti outlets in Malaysia are parked under master franchise holder Naza Tutti Frutti (M) Sdn Bhd.

KUALA LUMPUR: Wellspring Group, a US-based global master licencor of two developed brands namely, Tutti Frutti and O’My Buns!, is exploring the possibility of a backdoor listing via a reverse takeover (RTO) of Ace Market-listed SMTrack Bhd to expand its franchise food and beverage (F & B) business in Asia. 

Both companies on Friday signed a memorandum of understanding (MoU) for six months of exclusive period to discuss the acquisition of Wellspring Group by SMTrack. 

Wellspring director Datuk Mohamed Ridzuan Nor said since the company’s products were from the US, it was logical to have a logistics hub in Asia. 

“In five years’ time, we believe both China and India would become our biggest markets, together with Malaysia, Indonesia, Pakistan, Australia and New Zealand. 

“To offset forex exposure, we want a Malaysian hub to cater for Asia, while our American head-office in California would continue to focus on the US and European markets,” he told a press conference in Kuala Lumpur after the MoU signing. 

Ridzuan said Wellspring Group operated from the US, with a warehouse facility in Orange County in Los Angeles, California, serving its worldwide operation. 

Currently, the food brand management company has 506 Tutti Frutti distributors and 28 OMy Buns! distributors all over the world with 60 per cent of its market in the US. 

In Malaysia, it has nearly 100 outlets run by Naza Group, which parked the master franchise holder under Naza Tutti Frutti (M) Sdn Bhd. 

It began serving the frozen yoghurt brand since 2009 with its first flagship store in Sunway Pyramid. 

“Together with SMTrack, we might be looking to come out with other F & B products and there is also a possibility of acquiring local brands and bring them to 43 countries where we are already operating. 

“The discussion with SMTrack has been going on since last three months,” said Ridzuan, who is not denying that the corporate exercise would be an RTO or back door listing. 

Meanwhile, SMTrack chairman and chief executive officer Mohd Anuar Mohd Hanadzlah said F & B was a business that would survive any kind of economic situation. 

“During the exclusive period, we will work out a proposal to purchase 100% of Wellspring Group with the issuance of new SMTrack shares to existing shareholders of Wellspring based on a valuation to be agreed. 

“SMTrack core businesses will remain, our technology will complement the F & B operation,” he said. 

The signing of a definitive agreement for the acquisition is subject to the completion of due diligence and further information will be provided in due course, according to SMTrack statement at the MoU function. 

SMTrack share price on Bursa Malaysia was unchanged at 9.5 sen at the close on Friday with 19.37 million shares traded. - Bernama