Costly mistake in share purchase forced Osim to raise final offer price

A file picture of an Osim outlet. PHOTO: OSIM
A file picture of an Osim outlet. PHOTO: OSIM
OSIM International founder and chief executive Ron Sim speaking at the launch of the 2014 Enterprise 50 (E50) awards, on April 9, 2014.
OSIM International founder and chief executive Ron Sim speaking at the launch of the 2014 Enterprise 50 (E50) awards, on April 9, 2014. PHOTO: THE BUSINESS TIMES

SINGAPORE - The decision by Osim International's chief executive Ron Sim to further raise his offer price to take the company was resulted from a rare mistake in share purchase last week, a filing to Singapore Exchange on Monday (April 11) revealed.

On April 9, Mr Sim announced a new final offer price of S$1.39 per share - or S$1.41 including a 2-cent final dividend - in his bid to buy out Osim. The offer revision was a sweeter deal than the original ex-dividend final offer of S$1.37 per share proposed on April 5.

But it would appear that Mr Sim's hands were forced.

Right after the S$1.37 offer was made, shares were inadvertently bought for Vision Three - a private investment vehicle that Mr Sim uses to buy out Osim - between S$1.38 and S$1.39. As shares are traded in the open market without including dividend, this effectively means Osim bought shares back at a price higher than its own offer.

"These shares were purchased under the impression that the purchases were within the revised offer price as stated in the revised offer (of $1.37)," Credit Suisse, which manages the share purchase, said in the SGX statement filed on Monday.

The statement did not specify which party committed the error, which may prove costly for Mr Sim.

Vision Three had tried to apply for a waiver of these overpriced purchases, but the application was not granted by the authorities. Instead, it was asked to raise its offer price to no less than S$1.39 a share, or S$1.41 with dividend, to match the top end price of the accidental purchase.

This situation unfolded while the public was kept in the dark during the three-day surprise trading halt of Osim shares following the first final offer.

Vision Three stressed on Monday that there will be no further revision to the latest final offer of S$1.39 per share.

whwong@sph.com.sg