ETA Group Bhd Divests F&B Assets in RM22.73 Million Deal Strategic Pivot Away from Food Toward Property and Construction

TA Group Bhd, previously known as Rex Industry Bhd, has embarked on a decisive strategic reset, announcing the proposed disposal of its entire stake in Rex Foods Sdn Bhd and a partial interest in Indonesian canned food manufacturer PT Rex Canning for a combined cash consideration of RM22.73 million. The transaction, executed through a share sale agreement with VIP Bonanza Sdn Bhd, marks a clear departure from the group’s historical reliance on food and beverage revenue and signals a deliberate shift toward property development and construction as its future core pillars.

Transaction Breakdown: What Is Being Sold

The deal comprises two distinct components, structured as separate share transfers:

• Rex Foods Sdn Bhd: ETA will dispose of all 580,000 ordinary shares, representing 100% equity interest, for a cash consideration of RM8.68 million. Upon completion, Rex Foods will cease to be a subsidiary or associated company of the group.

• PT Rex Canning (Indonesia): ETA will sell 684 ordinary shares, equivalent to a 38% equity interest, for RM14.04 million. The company will retain the remaining 62% stake, keeping PT Rex as a majority-owned subsidiary and continuing its operational involvement in the business.

Collectively, the transactions value the divested portions at RM22.73 million. The group anticipates a modest pro forma loss of RM100,000 on the disposal a relatively small accounting shortfall that underscores the strategic nature of the decision rather than financial distress. ETA has confirmed that no additional or contingent liabilities will remain with the group post-completion, beyond standard contractual obligations under the sale agreement.

Strategic Rationale: From F&B to Property and Construction

For decades, food and beverage, particularly canned food manufacturing and export formed the backbone of ETA’s revenue. The timeline reflects deep, long-standing commitments:

• PT Rex Canning: Incorporated in Indonesia in August 1991; ETA has held an investment since July 1998

• Rex Foods: Established in September 1991; a foundational asset throughout the group’s evolution

Despite this legacy, the F&B segment has increasingly become a constraint rather than a driver. ETA’s board has stated that the rebalancing is designed to improve overall financial performance by reducing reliance on a single sector facing competitive pressures, margin compression, and slower growth dynamics. The group intends to progressively redirect capital, management focus, and resources toward property development and construction sectors viewed as offering stronger returns, higher value creation, and greater strategic alignment with emerging market opportunities.

The partial retention of PT Rex is noteworthy: it allows ETA to maintain exposure to the canned food export business and preserve existing cash flow while significantly scaling down operational complexity and capital commitment.

Financial and Operational Implications

• Cash infusion: RM22.73 million in proceeds will strengthen the group’s balance sheet, providing capital to fund property acquisitions, project launches, and construction-related investments

• Sector reweighting: The revenue mix will shift materially. Rex Foods is fully removed, while PT Rex’s contribution will be proportionally reduced, accelerating the transition to a property-led profile

• Loss impact: The RM100,000 accounting loss is minor and will not materially affect group net assets or liquidity; it reflects carrying values relative to sale consideration rather than diminished asset quality

• Liability clarity: Clean exit structure means no residual guarantees, contingent payments, or legacy obligations remain attached to the divested businesses simplifying the group’s risk profile

Broader Context: Corporate Restructuring in Transition

ETA’s pivot mirrors a broader pattern among Malaysian corporates, particularly those with long manufacturing or consumer-facing legacies, repositioning toward higher-growth, capital-intensive sectors. The renaming from Rex Industry to ETA Group itself signals this identity shift, separating the company from its F&B heritage as it steps into a new era.

Retaining majority control of PT Rex is a prudent intermediate step: it preserves a proven revenue stream and profitable export business while the property portfolio scales, ensuring earnings stability during the transition.

A New Foundation

The sale of Rex Foods and partial divestment of PT Rex Canning represent more than a portfolio adjustment; they are the formal closing of one chapter and the deliberate opening of another. By unlocking capital from a mature sector and redeploying it into property and construction, ETA Group is redefining what it stands for and where it will grow. The RM22.73 million proceeds are immediate, but the true value lies in the strategic flexibility they enable: the chance to build a company aligned with tomorrow’s opportunities, not anchored to yesterday’s strengths.