Discount cosmetic retailer Sa Sa International's shareholders have cleared the company's acquisition of a controlling stake in the health-club operator Phillip Wain for HK$110 million.
Under the deal, Sa Sa will acquire 50 per cent of the shares of Lisbeth, the company which holds the club, from Barry Wain for HK$79 million. It will then subscribe to 8.33 per cent of Lisbeth's new shares for HK$31 million.
Under the deal, the buyer will allow the club's two founders, Edwin Phillips and Barry Wain, to extend the repayment of their combined HK$24.1 million in unsecured and interest-free loans, which they obtained from the club, for up to one year after the completion of the deal.
'Such loans are historical loans and used for other investments of Mr Phillips and Mr Wain,' according to a circular from the company.
Based on Lisbeth's net profit of HK$3.2 million for the year to December 31, the price Sa Sa paid to Mr Wain represents a price-earnings ratio of nearly 50 times.
The price is also equivalent to 37.61 times Lisbeth's net asset value of HK$4.2 million last year.
Meanwhile, Sa Sa will be granted options to acquire Mr Phillips' holding in Lisbeth in two phases within six years.
