Osim increases its stake in TWG unit to 70%

LIFESTYLE products firm Osim International has bumped up its stake in subsidiary TWG Tea Company to 70 per cent, up from 53.7 per cent previously, after TWG undertook a rights issue to raise $25 million.

In a release to the Singapore Exchange (SGX) yesterday, Osim said: "The funds will be utilised mainly for expansion during 2014 and to repay a bank loan and a shareholder loan."

The investment is expected to be earnings accretive for Osim this financial year.

Osim first acquired a 35 per cent stake in TWG in 2011 for $31.36 million before going on to raise its stake in the company to 45 per cent in July last year. Osim received the additional 10 per cent stake, or 14,293 shares, in the tea retailer for a purchase price of $2 after founding members of TWG failed to meet performance targets for the year ended March 31, 2013.

Then in October last year, Osim scooped up a further 8.7 per cent in TWG for US$7.2 million, effectively giving it a controlling stake in the home-grown tea company.

In addition to its stores in Singapore, TWG also has outlets overseas in markets such as Dubai, Indonesia, London and Hong Kong. It had some 27 stores as at end 2013.

In an interview with The Business Times last month, TWG president Taha Bouqdib said that the company plans to expand aggressively this year by launching some 20 tea boutiques and shops in Asia and the Middle East. The retailer has grown sales to $55 million annually, compared with $1 million annually five years ago.

Established in 1979, mainboard-listed Osim sells products such as massage chairs, fitness equipment, diagnostic equipment and vitamin & supplements. As at Sept 30, 2013, Osim had some 1,125 stores groupwide across its various brands.

Shares in Osim closed at $2.38 on Friday, up five cents.