SINGAPORE - A consortium consisting of Tower Capital TCM Holdings LP, a unit of Temasek Holdings and Eu Yan Sang International Ltd group chief executive officer Richard Eu announced at 12:20am on Monday (May 16) a privatisation bid for the traditional Chinese medicine (TCM) retailer.
Tower Capital owns 42 per cent of the offeror, Temasek's Blanca Investments holds 30 per cent and Mr Eu the remaining 28 per cent of the consortium.
Through a special-purpose vehicle, Righteous Crane Holding, the consortium has made a voluntary conditional cash offer at 60 Singapore cents per share for all the issued and paid-up ordinary shares of Eu Yan Sang.
The company last traded at 64.5 cents on May 10 before a trading halt was called.
The consortium said the offer price is final and excludes the interim dividend of 2.5 cents per share announced on May 15.
Acceptance of the offer will not affect shareholders' entitlement to the interim dividend.
The consortium said the offer will go through if it and its concert parties receive enough valid acceptances such that they control more than 50 per cent of Eu Yan Sang.
As at the offer date, it controls about 30.656 per cent of the company. It has irrevocable undertakings to accept the offer from shareholders controlling about 63.2 per cent of the company, mainly from members of the Eu family, but also including a 10.651 per cent stake held by Aberdeen Asset Management Asia and 1.596 per cent by First State Investment Management (UK).
The offer price represents a premium of approximately 17 per cent and 25 per cent to the volume weighted average price per share for the corresponding three-month and six-month periods up to and including May 9, being the last full trading day prior to the announcement of the offer.
The group added that the offer price is also significantly higher than analysts' target price range of 30 to 36 cents per share, and implies a price to earnings ratio for the company of 58.8 times, based on the earnings per share of 1.02 cents for the financial year ending June 30.
Commenting on the offer, Tower Capital founder Danny Koh said: "We believe the offer price presents an attractive offer to Eu Yan Sangs shareholders in view of the company's recent financial performance and the current challenging environment it is operating in. Considering the low trading liquidity of the shares, the offer provides shareholders with more certainty, through an exit opportunity to realise their investment at a premium.
"The consortium's acquisition of the company will allow the new investors to partner with the participating Eu family shareholders in their efforts to invigorate the company's businesses."