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OSIM’s founder dangles more carrots to shareholders

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The Chairman and Chief Executive of OSIM International Ltd (the “Company” or “OSIM”), Mr. Ron Sim Chye Hock, has revised the Offer Price for OSIM shares to S$1.39 per share. The Offer was made through Vision Three Pte. Ltd. (the “Offeror”), a private investment vehicle legally and beneficially owned by Mr. Ron Sim.

There will be no further revisions made to the Final Offer Price. Judging by the size of the increase ($0.07), it seems that Ron Sim is not hell-bent to privatize the company. Nevertheless, the final offer still represent a premium of 40% for three-month periods up to and including 29 February 2016. With this latest development, it remains to be seen what the actual outcome of this saga will be like.

To be fair to the minority shareholder, although the offer made by Ron Sim is reasonable, many of them would have suffered heavy losses if the takeover materialized, especially if they had bought the shares at a high of $2.90 in 2014. They probably would have invested in OSIM based on the strength of its 21 consecutive quarters of profits from 2012 to 2014. That was an amazing feat for a local lifestyle company and many investors were enticed by OSIM’s fascinating story.

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Fast forward to 2016, OSIM is still growing and is still making profits, albeit lesser profits due to the challenging market conditions. The company is still cash rich and the brand name of OSIM is strong as well. With two strong brand names in TWG Tea and GNC, OSIM’s brand will definitely continue to be dominant in the lifestyle community. Unfortunately, Ron Sim wants to have the cake for himself and if the takeover do materialize, investors would be unable to participate in one of the most exciting growth stories in Singapore stock market.

I saw many investors blasting Ron in online forums for making the offer which they deemed to be too low. Their negative remarks are understandable given that many of them may suffer losses of up to 50%, which is real and painful. Many of them will be emotionally or even mentally scarred by the prospect of losing such huge quantum of investments. But it is important to note that Ron Sim is a maverick businessman who have built up OSIM from scratch into a global brand. Therefore, his interest is of course to make money for himself, and not for the investors.

Drawing from this episode, one of the important lessons for investors is that the stock market is not a place for sentimental or emotional players. There will always be winners and losers. You need to understand the market trends and learn where the market is heading.

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Updated: June 17, 2016 — 12:50 pm

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