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OSIM acquires China affiliate in 29m yuan deal

It will gain direct control of 182 outlets in 34 cities to strengthen its presence in China

OSIM International is strengthening its presence in China and gaining direct control of 182 outlets in 34 Chinese cities under a deal announced yesterday.

The healthy lifestyle group said it has acquired an affiliate, OSIM (Shanghai) Co, making it a fully-owned subsidiary, which it renamed OSIM (China) Co in a 29 million yuan (S$6 million) transaction.

The unit was formerly 90 per cent owned by Tao Dongmei, the wife of OSIM executive director Leow Lian Soon. OSIM pointed to the importance of China, saying it is one of its key markets and has been contributing positively to the company's growth and profitability.

In addition, the restructure revealed yesterday will also facilitate proper corporate governance and finance structure, which will help consolidate the company's activities in China.

'This will facilitate the development of the OSIM healthy lifestyle brand in China and help gain a strong foothold in one of the world's largest consumer markets,' the company said.

The 29 million yuan cash consideration for the acquisition comprises 5 million yuan relating to vendor shares and 24 million yuan involving injection of new capital. The cash consideration for the latter component was paid yesterday. The net asset value of OSIM China as at Nov 30 this year was nearly 8 million yuan. OSIM investors hope the new deal will spell profit growth for the group.

A fortnight ago, Brookstone Inc, whose acquisition by an OSIM-led consortium was completed on Oct 4, reported a net loss for its third quarter ended Oct 29.

The US specialty store posted a net loss from continuing operations of US$11.7 million, up from US$6 million in the previous corresponding period. After discontinued operations, net loss came to US$13.4 million, up from US$6.7 million. Third-quarter net sales came to US$76.7 million, a fall of 7.3 per cent.

Year-to-date net loss from continuing operations totalled US$20.4 million, up from US$9.9 million. After discontinued operations, year-to-date net loss came to US$25.9 million, from US$11.8 million previously.

Brookstone said that because of the seasonal nature of specialty retailing, it usually suffers a loss over the first three quarters and then makes its profit for the year in the fourth quarter.