Beacon Group to take over Khan Brothers for business diversification 

Beacon Group will now acquire the management and operations of Khan Brothers PP Woven Bags Industries, a publicly listed company.

In a stock exchange filing yesterday, Khan Brothers announced that it had cancelled a memorandum of understanding (MoU) with BSB Cambrian Education Group and signed a new deal with Beacon Group.

The new owner will acquire shares from the current board of directors at a negotiated value, ensuring a smooth transition of responsibilities and control of the company.

Earlier, in September, BSB Cambrian Education Group had voluntarily expressed its willingness to take over the management and operations of Khan Brothers PP Woven Bags Industries.

On Sunday, the company's share price closed at Tk155.20 on the Dhaka Stock Exchange. 

Khan Brothers PP Woven Bags Industries, listed on the stock exchange in 2014, manufactures and exports a range of products, including Flexible Intermediate Bulk Containers (FIBC or Jumbo Bags), Polypropylene (PP) woven bags, PP woven sacks, woven fabrics, industrial woven fabrics, and PP woven fabrics.

According to a disclosure published on the websites of the stock exchanges yesterday, both the buyer and seller signed a MoU, effective as of 4 November 2024.

Company Secretary Tapan Kumar Sarker explained that Khan Brothers PP Woven Bags Industries cancelled its MoU with BSB Cambrian Education Group because the group did not adhere to the agreed-upon payment method. 

Additionally, a director holding a 2% stake in the company decided not to sell his shares, which affected the planned takeover. BSB Cambrian Education Group had aimed to acquire all shares held by the company's sponsors and directors.

Following this, Khan Brothers PP Woven Bags Industries received a more attractive offer from Beacon Group. The company has now signed a new MoU with Beacon Group, which is expected to be completed by April this year.

"Currently, the factory operation is running on a limited scale as it produces products on a subcontracting basis. That is why the present management decided to sell off their holdings to a new owner," he added.

Md Jalal Uddin, chief financial officer of Beacon Group, told The Business Standard that the group's planned acquisition of Khan Brothers PP Woven Bags Industries aligns with its strategy to diversify its business portfolio. 

Khan Brothers, which is actively engaged in subcontracting and has stable operations, offers strong growth potential for both local and international markets.

Beacon Group intends to expand Khan Brothers' product offerings by manufacturing related accessories, such as cartons, which complement the company's primary products. This acquisition is also expected to enhance shareholder value by providing regular dividends and ensuring efficient management of business operations.

However, Md Jalal Uddin did not disclose the specific amount Beacon Group plans to invest initially following the acquisition.

For the fiscal 2023-24, Khan Brothers recommended a 1% cash dividend for its shareholders. Its earnings per share stood at Tk0.01, and its net asset value per share was Tk11.88 at the end of June 2024. 

As of 31 October, the shareholding structure consisted of 30.13% held by sponsor-directors, 9.32% by institutions, and 60.55% by the general public.