Singapore’s Big Winner of the Week: Chosen Holdings Limited

Shares of Chosen Holdings Limited (SGX: C10) have surged by around 38% from last Friday to close at S$0.235 this week.

This makes Chosen a big winner in our local market with Singapore’s market barometer, the Straits Times Index (SGX: ^STI), clocking in a 3.1% weekly decline.

Chosen, which was started in 1986, provides integrated manufacturing services such as “product design & development, mould design & fabrication, precision plastic injection moulding & secondary processes and final product assembly.” It has manufacturing facilities in Singapore, Malaysia, Thailand, and China.

On Wednesday, Chosen announced that Southshore Pte Ltd intends to gobble up all of its shares at S$0.24 apiece. This is a 21% premium from Chosen’s last transacted price of S$0.198 a share seen on 31 August 2015. Chosen, which was halted from trading from 1 to 2 September 2015, has a current market capitalisation of S$66.2 million.

Five shareholders of Chosen, which includes its Executive Chairman and Chief Executive Officer, have already committed to selling their shares to Southshore. The quintet collectively own 51% of Chosen.

Ultimately, the acquiring firm does not intend to keep Chosen listed on the bourse. Southshore added that privatising Chosen will allow it and the “management of [Chosen] more flexibility to manage and plan the Company’s business on a longer time horizon to optimise the use of its management and capital resources.”

The offer will become unconditional upon receipt of valid acceptances from the five shareholders. Other shareholders will receive the offer document between 16 and 23 September. From then on, the offer will be open for acceptance “for at least 28 days from the date of posting of the Offer Document.”

Chosen is now trading at around 18 times its historical earnings and has a dividend yield of 3.5%. The offer price is nearly on par with its book value per share of 23.77 cents as of 30 June 2015.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.