Beyond Three Generations – The Yeo Family – The Final Straw

May 26
4 min read

The unfortunate end to the family’s ownership of Yeo Hiap Seng, stolen from right under their noses

At this point in our story, the Yeo family were entrenched in factional infighting. One faction, led by Alan, was controlling the business and steering the company into ambitious ventures. The other faction, led by his nephew, Charles, wanted to oust this chairman / CEO for bad business decisions and growing losses in the business.

What was to come of this battle? Let’s find out.

The takeover battle

In the early 90’s, Alan Yeo threw his support behind a bid by Wing Tai Holdings to purchase a 40% stake in the company, so that YHS could use Wing Tai’s connections and expertise to develop their Bukit Timah property holdings.

However, Charles Yeo (with his faction of the family) blocked this bid as part of the holding company, and the bid failed. At the time, Alan and his faction held just under half the votes, and Charles’ faction held the majority, which meant that Alan had lost control over decision making for the holding company, and could not see his plans through. This, alongside a number of acrimonious attempts to oust Alan as CEO and chairman, was the final straw.

In retaliation, Alan filed for the dissolution of the holding company in May 1994, which finally caused the division of the unified controlling stake in the company being split up amongst the family.

With that, the tigers saw their opening, and pounced.

Ng Teng Fong, through his company Orchard Parade Holdings, had quietly started to purchase YHS stock on the open market, and with this opportunity, aggressively bought more. Quek Leng Chan, one of the richest men in Malaysia, quickly followed and also started rapidly buying up stocks, including Alan’s personal stake in the company, and was also able to convince Charles to ally with him on control of the company. This triggered one of the most competitive takeover battles in Singapore, with both parties bidding up the price of YHS shares on the market.

However, in the end, Ng Teng Fong was able to purchase up to 75% of the company through a public offer of $5.35 per share, effectively winning the takeover battle and acquiring majority control.

The outcome

Once Ng was able to take over YHS, he moved its factory operations off the Bukit Timah land, and pivoted company operations to real estate development while preserving the food and beverage product lines that made it popular. He brought in new management, and many of the existing Yeo family were ousted from their positions. The Far East Organisation was able to profit handsomely from developments on the Bukit Timah land, and to this day owns YHS as a key food and beverage brand within their portfolio.

The Yeo family are no longer a controlling interest or part of the substantial shareholder list for YHS. The last member of the Yeo family who was in a senior management role at YHS was Yeo Chee Yan, a managing director of YHS Malaysia who retired in 1999.

So, what should I do?

The Yeo family’s downfall is an important study for family businesses, with many lessons that can be learnt from a roaring empire that fell from grace due to family in-fighting, lack of cohesive vision, and the importance of succession planning:

Think about legacy: Though the success of the Yeo family was shared, they did not have a unified vision for how their legacy would continue. This created a situation where one person could steer the ship in the way they wanted, without following an agreed upon vision, causing resentment and infighting. For you - how will your assets and enterprise pass on to your family? If there is a large amount of wealth to be passed on, or even to be used as a safety net for their future, how will the family deal with differences of opinion?
Think about structure: The Yeo family only had one enterprise, and one holding company to hold the entire family; this meant there was one point of failure that was ultimately dissolved and caused the fracturing of the controlling interest. Separate structures and subsidiaries could have been put in place to more cleanly separate family interests (e.g. the way that the Ng Family dealt with succession), as well as trusts or family constitutions to govern decision making. Do you have the right structures in place to prevent conflict from occurring in the first place?
Think about succession: The Yeo family was treated like a kingdom – with the eldest son always being in line for the throne. Other Yeo family members were leapfrogged into positions that they may not have been prepared for, but without alignment on where they wanted the family business to move next. Succession planning is a conscious decision on roles, responsibilities, and alignment on expectations. Does your family know your plans for your assets? Will your wishes be honoured for the legacy you’ve built?

If you want help answering these questions, get in touch with us at Pebly – we have experience in navigating these important considerations for family businesses, and have a wealth of knowledge to share.

Disclaimer: General information only – none of the above constitutes legal, financial, immigration or tax advice. Please speak to a licensed professional to assess your specific circumstances.

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