OSIM – new cash offer of $1.39 per share

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.

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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.

 

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