The group bidding to take control of Eu Yan Sang (Hong Kong) says it has boosted its holding in the Chinese medicine manufacturer to more than 50 per cent after buying more shares on Friday. Launched on Thursday by the group, which is being led by non-executive director Robert Eu Yee-sang and Hong Kong venture capital firm MBO Partners, the $1.25-a-share offer values Eu Yan Sang at $227 million. The group said it had bought 3.83 million shares or 2.1 per cent of the capital at prices ranging from $1.20 to $1.25 on Friday, boosting its direct stake to 6.5 per cent. The shares were up 13 cents that day to $1.22. Taken together with undertakings to accept the offer from holders of a further 43.9 per cent, the bidders said they held more than 50 per cent of the company's voting rights and that the offer was unconditional. Mr Eu, one of the younger family members, advised Eu Yan Sang in late June that he was in talks with other family members who were not directors about launching an offer for the company. The bid follows divisions between the family's third and fourth generations. The older generation is headed by chairman Edward Eu Keng-oi, 75, who said in a statement attached to the interim results for the six months to June that an independent board committee had been set up to consider its recommendation on the offer. He advised shareholders not to take any action until the committee had issued a recommendation. The company's profit during the first half of this year jumped 174 per cent to $6.44 million year-on-year largely due to cost controls imposed while the retail market was generally sluggish. The jump came despite an exceptional loss of $5.7 million arising from a provision for diminution in value of other investments and a provision for a deposit paid. The retailer recorded an exceptional loss of $5.7 million in the previous period due to a deficit on revaluation of properties. Turnover rose 10.9 per cent to $70 million from $63 million while operating profit was up 46.8 per cent to $14 million from $9.6 million last year. Earnings per share soared 174 per cent to 3.54 cents from 1.29 cents. Interim dividend per share doubled to a cent from half a cent last year. Retained profit for the period climbed 222 per cent to $4.6 million from $1.4 million. Edward Eu said weakening consumer spending ability prompted the group to strengthen its core business, rationalise operations, explore new channels for retailing and use cost controls. 'These strategic measures have been translated into real financial benefits in terms of encouraging profit attributed to shareholders,' he said.
