Eu Yan Sang's privatisation offer extended again

The consortium looking to take Eu Yan Sang International private has again extended the deadline for its offer after failing to convince two substantial shareholders to accept its price of 60 cents a share.

Takeover vehicle Righteous Crane, which had already extended the offer period four times, said the deadline has been moved from yesterday to Sept 12.

Righteous Crane is led by UOB-backed fund Tower Capital and comprises Temasek Holdings unit Blanca Investments as well as Eu Yan Sang chief Richard Eu.

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

Righteous Crane, which has said before that it will not raise its price, declared its offer for Eu Yan Sang unconditional on June 29. There is no limit to how long an unconditional offer can be extended.

By extending its offer by another 14 days, Righteous Crane gets more time to accumulate the remaining 5.4 per cent of Eu Yan Sang shares that are still in public hands.

The wait is being drawn out as Righteous Crane has not been able to acquire enough shares to take Eu Yan Sang private. It needs to control 90 per cent to trigger a compulsory acquisition of the shares it does not own. As of last Friday, it controlled 84 per cent.

Blocking Righteous Crane's takeover bid are two substantial shareholders - Hillhouse Capital Management and Target Asset Management's TFW Fund. They hold a combined stake of 10.6 per cent in Eu Yan Sang.

Why they are not keen on the offer is unclear, but filings show that both funds had raised their stakes in the TCM firm by buying shares above the 60-cent offer price shortly after Righteous Crane launched its bid. Hillhouse could not be reached and Target Asset Management declined to comment.

But by extending its offer by another 14 days, Righteous Crane gets more time to accumulate the remaining 5.4 per cent of Eu Yan Sang shares that are still in public hands.

Since the public float in Eu Yan Sang has fallen below the required 10 per cent for it to stay listed, investors who do not accept the offer by Sept 12 will be stuck with illiquid shares.

This year has seen a number of home-grown firms go for delistings amid a lacklustre market, some of them - like lifestyle products seller Osim International and restaurant chain Select Group - more controversial than others.

Most recently, a consortium led by Sim Lian's founder launched a privatisation bid for the builder and property developer earlier this month.

A version of this article appeared in the print edition of The Straits Times on August 30, 2016, with the headline 'Eu Yan Sang's privatisation offer extended again'. Print Edition | Subscribe