Eu Yan Sang set for SGX delisting with consortium bid

Eu Yan Sang CEO Richard Eu owns 28 per cent of the consortium making the bid. Tower Capital TCM Holdings owns 42 per cent, while Temasek Holdings' Blanca Investments holds the remaining 30 per cent.
Eu Yan Sang CEO Richard Eu owns 28 per cent of the consortium making the bid. Tower Capital TCM Holdings owns 42 per cent, while Temasek Holdings' Blanca Investments holds the remaining 30 per cent.PHOTO: COURTESY OF RICHARD EU

Another storied corporate brand name could be set to exit the Singapore Exchange (SGX), joining a number of companies that have departed recently.

Traditional Chinese medicine (TCM) specialist Eu Yan Sang International, whose origins date back to 1879, is best known for tonics and TCM clinics.

The company announced yesterday that it has received a bid from a consortium that includes a unit of Singapore's investment company Temasek Holdings, valuing the firm at around $269 million.

 
 

The consortium, through a special-purpose vehicle, Righteous Crane Holding, has made a voluntary conditional cash offer at 60 cents a share for all the Eu Yan Sang shares it does not own. Credit Suisse is acting as exclusive financial adviser to Righteous Crane.

The offer price represents premiums of about 17 per cent and 25 per cent to the volume-weighted average price per share for the three- and six-month periods up to May 9 - the last full trading day before the offer.

The offer is also significantly higher than analysts' target price range of 30 cents to 36 cents per share.

Tower Capital TCM Holdings, an investment holding firm founded by dealmaker Danny Koh, owns 42 per cent of the consortium. UOB Venture Management, a venture capital arm of United Overseas Bank, is an investor in Tower Capital.

Temasek's Blanca Investments holds 30 per cent of the consortium, and Eu Yan Sang International group chief executive officer Richard Eu the remaining 28 per cent.

The consortium said the offer will go through if it gets enough shares to take its stake past 50 per cent of Eu Yan Sang. It has irrevocable undertakings to accept the offer from shareholders controlling about 63.2 per cent of the company, mainly members of the Eu family but also including a 10.6 per cent stake held by Aberdeen Asset Management Asia and 1.6 per cent by First State Investment Management (UK).

The Straits Times understands that the remaining 36.8 per cent is held largely by the public and some other Eu family members.

The counter last traded at 64.5 cents on May 10 before a trading halt. The shares dropped 4.7 per cent or three cents to 61.5 cents after trading resumed yesterday.

The consortium said the offer price is final and excludes the interim dividend of 2.5 cents per share announced on Sunday.

Tower Capital's Mr Koh said: "We believe the offer price presents an attractive offer to Eu Yan Sang's shareholders... Considering the low trading liquidity of the shares, the offer provides shareholders with more certainty... to realise their investment at a premium."

The consortium said if enough shares were tendered for Eu Yan Sang to delist, there would be savings on the costs of listing and allow the company to focus its resources on business operations.

An SGX spokesman said: "Delisting of listed companies is part and parcel of any well-functioning capital market providing opportunities for shareholders to exit, and investors to uncover hidden gems within the market."

On Temasek, RHB Research head Ong Kian Lin said it appears to be getting consumer retail names at an attractive price that it can possibly spin off later. Jumbo Seafood, which listed last year, saw Temasek investing $10 million in it.

In addition to its retail and distribution business, Eu Yan Sang has a manufacturing plant in Hong Kong and Malaysia, and operates 31 TCM clinics in Singapore, Hong Kong and Malaysia.

A version of this article appeared in the print edition of The Straits Times on May 17, 2016, with the headline 'Eu Yan Sang set for SGX delisting with consortium bid'. Print Edition | Subscribe