Takeover offer on the menu for Tsui Wah founders

Restaurant chain Tsui Wah, which specialises in Hong Kong snacks such as condensed milk buns, saw its shares surge the most in more than three years on Wednesday after announcing its five major shareholders had been approached over a possible takeover.

Shares in the home-grown catering giant shot up as much as 23 per cent, following the statement that three companies owned by its five co-founders, including its chairman, had received a “third-party” bid for a possible acquisition of 62 per cent of the company.

The move comes just weeks after Tsui Wah posted a 54.5 per cent year-on-year slump in its net annual profits, dragged down by a tourism downturn in Hong Kong and mounting costs brought about by an ambitious expansion in the mainland.

Over the past year the company has also been rocked by a couple of high-profile departures, which analysts said on Wednesday could make it difficult for the five shareholders to reach a consensus on any deal.

One of the co-founders Cheung Wai-keung stepped down as a non-executive director late last year, while another, Ho Ting-chi, resigned as its chief executive in June.

Hannah Li, senior analyst with UOB Kay Hian, said: “A big obstacle for the potential deal is that any new proposals that will have a critical impact on the company would have to get a green light from all five of Tsui Wah’s co-founders, as stipulated by a binding agreement they previously signed.