Companies seeking to break into markets sometimes do so via acquisition. If the market is established and there are high barriers to entry, establishing a sizeable beach head through an acquisition is only the feasible way to do so, and can often be a costly exercise.
Take for example DBS Bank which acquired Dao Heng bank in order to gain access to the Hong Kong banking market. Or SingTel which acquired Optus to gain access into the Australian telecommunications market. Both paid high premiums to make the acquisitions, and both parent companies have taken large write-downs to their respective holdings.
A similar seems to have happened with OSIM. Osim acquired Brookstone, and paid a hefty 20x earnings to acquire the company. And now it looks like the acquisition is underperforming. Does the argument of acquiring to gain market access make sense?
Well the problem with doing so is that the acquiring company often pays too much for a second best asset that do not justify the premiums paid. The market leaders are hardly candidates for buyouts. Perhaps a better strategy is to pay a fair price for a smaller player and grow market share organically. Or the competitive nature of established markets may mean that a prospective entrant should stay away altogether.
Osim is likely to make a significant write-down of its acquisition of Brookstone in the future, if it doesn't divest the company at a loss.