Singapore-based conglomerate Royal Golden Eagle (RGE) announced last Friday that it has made a takeover offer for Hong Kong-based tissue and diaper manufacturer Vinda International Holdings Limited (Vinda). The cash offer values Vinda International at HK$26 billion (approximately US$3.35 billion or €3.04 billion). Before delving further into the takeover offer, let me briefly introduce the relatively unknown companies to Europe.

RGE and Vinda in Brief
RGE was founded in 1973 by Sukanto Tanoto. The now billionaire Tanato is still chairman of RGE, which has developed over the decades into a globally active company.

Today, the RGE Group consists of numerous subsidiaries that are leading in industries such as pulp and paper (APRIL and Asia Symbol), palm oil (Asian Agri and Apical), viscose fibers (Sateri and Asia Pacific Rayon), specialty pulp (Bracell) and energy development (Pacific Oil & Gas).

The RGE Group has offices in Indonesia, China, Brazil, Canada and Spain and sales offices in many other countries. The company is privately owned. RGE owns assets worth more than US$30 billion and employs around 70,000 people worldwide.

Vinda was founded in 1985 and is based in Hong Kong. The company is mainly active in the household paper and body care products sectors. Vinda offers tissues under the Tempo, Vinda and TORK brands, incontinence products under the TENA and Dr. P brands, feminine hygiene products under the Libresse brand and baby care products under the Libero and Drypers brands.

In addition, Vinda is also involved in the trade of pulp and machines, in home health care and health advice, as well as in import and export. The Swedish hygiene product manufacturer Essity Group Holding BV holds 51.59% of Vinda shares.

In the 2022 fiscal year, Vinda’s nearly 12,000 employees generated a turnover of HK$19.4 billion (approximately €2.27 billion). The operating profit (EBIT) was HK$841,859 (approximately €98,376).

Further details of the takeover offer In its offer, RGE offers HK$23.50 for each outstanding Vinda share. The offer includes a takeover premium of 13.5% based on the closing price of Vinda’s shares on 14 December 2023, the last day before the offer was announced.

Furthermore, RGE stated that the two largest Vinda shareholders, which together own approximately 72.63% of the issued Vinda share capital, have already irrevocably committed to accepting the RGE offer in advance. These major shareholders are the Swedish Essity Group Holding BV and the founder and chairman of Vinda, Mr. Chao Wang Li. Another 7.69% of Vinda shares are owned by the Beaumont Capital Fund Ltd, which in turn is owned by the daughter of Sukanto Tanoto.

How the markets reacted On the Hong Kong Stock Exchange HKSE, the announcement of the takeover offer, as expected, triggered a jump in the Vinda papers. The price rose 9.2% last Friday to HK$22.60.

It was therefore only slightly below the HK$23.50 offered by RGE. Investors are obviously confident that a takeover will take place. This is particularly evidenced by the high Vinda shareholding of more than 80% secured by RGE in advance.

How it should go on RGE has stated in its press release that there will be no major changes to Vinda’s current operations, including shifting of assets or significant changes in management or employees.

The submission of an official takeover offer to Vinda shareholders and the completion of the transaction are subject to the approval of the regulatory authorities in China and other relevant markets. According to Essity, the transaction is expected to be completed by mid-2024.