Since the new cash offer of $1.39 per share more than a week ago, Mr Ron Sim through his private investment vehicle, Vision Three Pte Ltd, has now owned a total of 554,456,143 shares. This represents about 74.77% of the total share outstanding as of 5pm on 13 April 2016. Since the announcement of the cash offer to take OSIM private, Mr Ron Sim’s stake has increased by 5%. This means that there are 187,137,413 (or 25.23%) shares still remains in the float. Although the closing date has now been postponed to 29 April following the new cash offer, it is drawing closer by each passing day.
Now is the mid-point between his new offer and the end of the offer date. Given that he has accumulated an additional 5% of the total shares outstanding to date, therefore, it is within expectation that he should be able to accumulate another 5% in the next few days. This would mean that he should have more than 80% (or even 85%) by 29 April 2016. However, I am not sure if at this price, it is able to cross-over the 90% threshold to take the company private. There will definitely be some reluctant shareholders who would not sell their shares at this price as they might have bought the share at a high price when the share price of OSIM crossed $2 per share.
If we look at the situation from the Mr Ron Sim’s perspective, for every 1-cent increase in his cash offer, it is going to set him back by about $2.2m (excluding the extra fees and additional costs). Therefore, it is of course in his interest to set a price just to cross the threshold of 90%. Hence, each step increase is not likely to be significant. However, I do believe that if he sensed that the threshold is within a ‘striking distance’, he may make a final higher offer to reach his objective. As a shareholder since the global financial crisis in 2009, I shall closely monitor the progress in the next few days before making my decision.
Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.