KUALA LUMPUR: DXN Holdings Bhd’s major shareholders have issued a notice of conditional takeover to acquire all the remaining shares in DXN they do not own at RM1.75 per share, a 23.2% premium to the stock’s closing price of RM1.42 sen yesterday.

In a filing with Bursa Malaysia yesterday, DXN said it has received conditional takeover offer from Deras Capital Sdn Bhd, DXN Group Sdn Bhd (DGSB), Temasek Sejati Sdn Bhd (TSSB), Lim Boon Yee (LBY) and Lim Yew Lin (LYL), collectively known as the joint offerors.

According to the Kedah-based DXN, which is a multilevel marketing (MLM) company that distributes lingzhi-based and other herbal health products, the offer is subject to a 90% acceptance condition and the joint offerors do not intend to maintain the listing status of the company in the event of the 90% acceptance condition is achieved.

Others acting in concert with the joint offerors include Datuk Dr Lim Siow Ji, his spouse Datin Leong Bee Ling and Kee Yew Oi, spouse of LBY. Lim is the executive chairman/CEO, director and substantial shareholder of DXN. He is also a director and a substantial shareholder of Deras, DGSB and TSSB. Leong is a non-independent non-executive director and substantial shareholder of DXN who is also a director and substantial shareholder of Deras and DGSB, while Kee is a director in TSSB.

Deras and DGSB are investment holding companies while TSSB is a investment holding company involved in general trading whose shareholders are Lim and LBY.

To date, the joint offerors hold 66.62% of the issued and paid-up share capital of DXN (excluding 15.78 million of treasury shares). DGSB has a 47.95% stake in DXN while TSSB has 0.91%. LBY holds 16.74% and another 0.91% of indirect shares while LYL has 1.02% stake.

DXN’s principal product, by its scientific name, is a mushroom that has been consumed as a health supplement in Asia, especially China, for thousands of years. DXN grows this tropical mushroom in sheds on its own farms near Alor Setar. It has about 120 lingzhi sheds compared with 43 at the time of its initial public offering in 2003. It has also increased its spirulina ponds to 16 from three.

It is worth noting that DXN has established an impressive global presence. According to the company’s website, DXN has operations in the Americas, which include units in the US, Peru and Puerto Rico. It is also present in the Middle East and former Soviet countries such as Russia and Kazakhstan. Nearer to home, DXN has expanded to regional markets including Indonesia, Thailand and the Philippines.

DXN posted a net profit of RM41.2 million or 18.14 sen a share for FY11 ended Feb 28 and RM9.12 million in 1QFY12 ended May 31. The company had a market value of RM341.9 million as per its stock’s closing price yesterday.

This article appeared in The Edge Financial Daily, September 6, 2011.