At that time, the investors – who formed a takeover vehicle called Righteous Crane Holdings Pte. Ltd – already had majority ownership of Eu Yan Sang and had offered to buy minority shareholders’ stakes in the company at a price of S$0.60 per share.
Yesterday, Righteous Crane revealed that it has extended its deadline for the buyout offer to 29 August 2016. The closing for the offer was previously extended from 1 August 2016 to 15 August 2016.
At the time of yesterday’s extension announcement, substantial shareholders of Eu Yan Sang, including but not limited to Righteous Crane, owned 94.13% of the company. As such, only 5.87% of Eu Yan Sang’s shares are considered to be held by the public. (Shareholders who own 5% or more of a company’s shares are deemed to be substantial shareholders.)
Under Singapore’s listing rules, listed companies that have less than 10% of their shares held by the public could see their shares suspended from trading or even delisted. Eu Yan Sang has already passed the 10% free float rule but Righteous Crane has not reached the 90%-ownership threshold to trigger a compulsory acquisition of the company.
Righteous Crane has indicated that if it is not able to obtain the required 90% of Eu Yan Sang’s shares by the extended deadline and the company’s shares are suspended from trading or delisted, it has no plans to relieve any trading suspension or restore the listing status.
So, it seems that regardless of whether Righteous Crane is able to completely buy over Eu Yan Sang, the listing status of the TCM retailer would still likely come to an end soon.
A similar situation arose during the privatization effort of Keppel Land by its parent company, Keppel Corporation Limited (SGX: BN4). A portion of Keppel Land’s minority shareholders were caught without a liquid market to trade their shares when the company was delisted even when Keppel Corporation was not able to gain a 100% stake.
Will there be a case of déjà vu with Eu Yan Sang? The remaining 5.87% of minority shareholders holding onto the company’s shares might want to make their decision soon before it is too late.
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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 writer Stanley Lim does not own any companies mentioned above.