It has been one of the best-known firms on the Singapore Exchange for the past 15 years but entrepreneur Ron Sim is preparing to take his lifestyle products company Osim International private.
If the deal goes through, the buyout will mean one of Singapore's household names, one famed for its massage chairs, will no longer have a presence on the local bourse.
Mr Sim, who already owns 68.31 per cent of Osim, said yesterday he is offering investors $1.32 a share in an unconditional deal that will see him shelling out as much as $310 million.
The offer price represents a premium of about 33.5 per cent to the volume-weighted average price over the three months to Feb 29. It also reflects a 7.8 per cent premium over the last traded price on March 1 before the stock was suspended.
Last Tuesday, Osim shares jumped over 10 per cent, to end at $1.225. Trading will resume today.
Osim said yesterday: "The offer provides an opportunity to Osim's minority shareholders to sell their stake at a significant premium over the prevailing share price amidst challenging market conditions."
No reason was given for why Mr Sim wants to take the company private but sources say regulatory compliance and market volatility could be possible factors.
Osim, which has a market cap of about $908 million, was founded in 1980 and listed on the Singapore Exchange in July 2000. It soon became a market darling and shares soared.
But in 2006, it swung into a quarterly loss, hit by losses at its unit, US retail chain Brookstone. In early 2009, the shares plunged to five cents and the company did a rights issue.
But Osim staged a turnaround. It wrote off the Brookstone investment completely and expanded aggressively in China. Investors also welcomed its move to acquire luxury tea brand TWG and the shares hit a high of $2.90 in May 2014.
But it has been a downward trend since. DBS Group Research noted that annual sales growth has slowed from 15 per cent in the third quarter of 2012 to a negative 13 per cent in the first quarter of 2015, although the decline was less severe in the fourth quarter of last year.
Weaker retail sales, market volatility and currency turmoil contributed to net profit for the year ended Dec 31 falling 50 per cent to $51 million, while revenue declined 10 per cent to $620 million.
The company proposed a final dividend of two cents a share, which is included in the offer price of $1.32.
In the offer announcement, Osim noted that Mr Sim has no intention of reducing headcount other than in the ordinary course of business. Once the buyout offer closes, he will conduct a comprehensive review of Osim's operations, management and financial position, it added.
The offer document is expected to be sent to shareholders in two to three weeks. The offer will remain open for at least 28 days from the date of posting.
The market for consumer goods is expected to be challenging, analysts said.
OCBC Investment Research noted in a report yesterday: "Given the tough environment ahead and the lack of strong drivers for earnings, we view this offer to be reasonable and recommend shareholders to accept the offer."
NRA Capital research director Liu Jinshu told The Straits Times that "the offer price is rich based on Osim's earnings today".
He added that it will be attractive to shareholders "if they think that Osim's performance or that consumer demand will weaken further".
Credit Suisse (Singapore) is the financial adviser to Mr Sim and Morgan Lewis Stamford is his legal adviser.
