KUALA LUMPUR: China-listed firm Xiamen Comfort Science & Technology Group Co has launched a takeover offer to buy Ogawa World Bhd at RM1.05 cash per share.

The offer price is at a premium of 22% over its last traded price of 86 sen.

In an announcement to Bursa Malaysia, Ogawa said the takeover offer covers all the ordinary shares of 50 sen each in Ogawa, excluding treasury shares not held by the offeror.

Xiamen will also acquire all the new Ogawa shares that may be issued from the outstanding options under the company’s executives share option scheme.

According to a document posted on Bursa Malaysia, the offer price was determined after taking into consideration the historical financial performance of the Ogawa group for the 2013 financial year ended June 30 (FY13).

“The offer price of RM1.05 represents a price earnings multiple of approximately 8.75 times based on the unaudited earnings per share of Ogawa at 12 sen,” the document said.

Based on the unaudited financial statements of Ogawa group for FY13, its profit after tax and minority interest was RM14.37 million.

The offer is conditional upon the offeror having received a valid acceptance by the closing date, which will result in the offeror holding in aggregate of more than 50% of Ogawa shares, excluding treasury shares.

The announcement revealed that seven shareholders, who collectively hold 53.9% of Ogawa, have agreed to accept the takeover offer. They are Great Genesis Sdn Bhd with 51%, Wong Lee Keong, Lim Poh Khian, Lim Mee Ling, Cheah Yew Kong, Chong Swee Main and Lim Wai Heng.

Wong, who is the company’s non-independent non-executive chairman, is the single largest shareholder with a 42.66% stake, while Cheah is the deputy chairman. Mee Ling, Chong and Wai Heng are executive directors. Poh Khian is a non-independent non-executive director.

The offer will remain open for acceptances for a period of not fewer than 21 days from the date of the notice.

Xiamen, a listed entity on the Shenzen Stock Exchange, is involved in the manufacturing and sale of healthcare equipment as well as supplementary appliances.

The Chinese firm has a registered and paid-up capital of 240 million yuan (RM130 million), comprising 240 million ordinary shares of one yuan each.

AmInvestment Bank Bhd, the adviser for the takeover deal, said it is satisfied that the offer will not fail due to insufficient financial capability of the offeror and that every holder who wishes to accept the offer will be paid fully in cash.

“In accordance with the Malaysian Code on Takeovers and Mergers 2010, the board [the members who have accepted the offer] will deliberate on the offer and consider whether to seek an alternative offer,” said Ogawa.

This article first appeared in The Edge Financial Daily, on September 10, 2013.