Beauty and wellness firm Mary Chia Holdings has entered into a sale and purchase agreement to buy an 80 per cent stake in five companies under the Monsoon Hairdressing group for about $3 million.
The seller is Lee Eng Tat, or Addy Lee, a celebrity hairstylist and the founder of Monsoon, the Catalist-listed firm announced on Tuesday night. The target companies are primarily in the business of providing hair services and hair care products.
Half of the consideration for the deal will be paid in cash. The remainder will be satisfied by the issuance of new shares in the company subject to certain conditions, Mary Chia said.
Separately, the firm on Tuesday also announced that it has entered into a subscription agreement with I Concept Global Growth Fund that will raise $800,000 to partially fund the proposed stake purchase in Monsoon Hairdressing.
The subscriber has agreed to take on about 5.6 million new shares in Mary Chia at an issue price of 14.4 cents. The issue price represents a 10 per cent discount from the counter's volume-weighted average price of 16 cents on Sept 22, being the last full market day prior to the date of the subscription agreement.
I Concept Global Growth Fund's sole shareholder is Mr Michael Liew, who is purchasing the shares "purely for investment purposes", with no intention of influencing the firm's management or exercising control over the company, Mary Chia said. Mr Liew was introduced to Mary Chia by a substantial shareholder of the firm.
He has also agreed to provide additional funds of $600,000 to Mary Chia by no later than March 31 next year, the terms of which will be set in a subsequent subscription agreement, the firm said.
In accounting for the proposed acquisition, Mary Chia said the target companies are complementary to the group's current beauty and wellness offerings.
The company intends to cross-sell products to customers, providing them with a wider variety of products and services. It added that the proposed acquisition could lead to cost savings from joint resources and possibly the sharing of premises, which constitute a major part of total operating costs.
Mary Chia chairman and chief executive Wendy Ho said the group will be able to achieve greater economies of scale with the proposed merger.
"More importantly, Mary Chia will be able to leverage Addy's established overseas presence, particularly in China, to expand our reach in the Chinese market swiftly," she added.
THE BUSINESS TIMES