SINGAPORE and HONG KONG, China, January 24, 2022 /PRNewswire/ — Recco Control Technology Pte. Ltd and Dazheng Group (hong kong) Investment Holdings Company Limited, together with certain members of the consortium of purchasers, announced today that, the December 3, 2021, the consortium has submitted a non-binding proposal to acquire Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) (the “Company”) in an all-cash transaction via a negotiated friendly merger and today sent a letter to the Board of Directors of the The Company reiterates the proposal and requests to commence due diligence and negotiation processes with the buyer consortium to maximize shareholder value.
Pursuant to the proposed acquisition, Hollysys shareholders would receive $25 per Hollysys share in cash, representing a premium of 69.4% over the closing price of Hollysys shares of $14.76 to January the 21st, 2022. The consortium’s offer also represents a 75.5% premium to the volume-weighted average of the share’s closing price during the 30 trading days preceding January 22, 2022, and a 51.7% premium to the volume-weighted average closing price over the 180 trading days preceding January 22, 2022.
At this stage, there is no guarantee that an agreement can be reached between the consortium and Hollysys.
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Below is the full text of the letter sent today.
January 24, 2022
Board of directors
Hollysys Automation Technologies Ltd.
No.2 Disheng Middle Road
Beijing Economic and Technological Development Zone
Beijing, People’s Republic of China, 100176
Note: Mrs. Li Qiao, President
Dear Board Members:
As you know, on December 3, 2021, we have submitted to you a non-binding proposal (the “Proposal”) for a potential acquisition of Hollysys Automation Technologies Ltd. (the “Company”) through an amicably negotiated merger. Over the past seven weeks we have attempted to engage in friendly discussions with you, your financial adviser and your legal adviser to explain and develop our proposal, but so far no substantial progress has been made and the proposal has not been made public by the company.
Our Proposition is superior to (i) the $23 per share proposal made by Superior Emerald (Cayman) Limited and Mr. Changli Wang to July 20, 2021 and (ii) the $24 per share proposal made by Zhejiang Longsheng Group Co., Ltd. and Loyal Valley Innovation Capital (HK) Limited on September 10, 2021 (collectively, the “Previous Offerings”), both of which were disclosed by the Company. Accordingly, we strongly believe that our proposal would provide the Company’s shareholders with immediate, certain and highly attractive value that reflects the potential of the Company’s business as well as the benefits of the Acquisition.
This letter reiterates the terms of our proposal, which has been approved by each member of our consortium, led by Recco Control Technology Pte. Ltd and Dazheng Group (hong kong) Investment Holdings Company Limited and include other members including a Chinese state-owned strategic investor.
Our proposal
Price: We are prepared to acquire all of the issued and outstanding shares of the Company that are not held by our consortium for $25.00 per share in cash, to be implemented via a friendly fusion of the Company with an acquisition vehicle that we will establish. We believe this all-cash offer provides the Company’s shareholders with the best opportunity to maximize the full value of their shares immediately, with certainty. Our offer represents:
- A premium of 69.4% over the closing price of $14.76 to January 21, 2022
- A 75.5% premium to the volume-weighted average closing price over the 30 trading days preceding January 22, 2022
- A premium of 51.7% over the volume-weighted average price during the 180 trading days preceding January 22, 2022
Our proposal fully values the Company and its subsidiaries and also takes into account the synergies that we envisage to result from the acquisition of the Company by our consortium. Compared to the previous offers you advertised, our offer offers the highest price premium.
Funding: Our all-cash offering provides transaction certainty. We have engaged in a thorough analysis of the potential financing options available to us and are very confident in our ability to obtain final commitments for the debt and equity financing required, subject to the terms and conditions that will be listed there. when the definitive acquisition agreements are signed. In this regard, we note that the Consortium has received and shared with you a copy of a Memorandum of Understanding from the Industrial Bank of China, sealed with the bank’s official chop, which would cover all of the consortium’s debt financing requirements for the proposed transaction, and that each member of the consortium has sufficient liquidity to fund its respective share of the equity component.
Regulatory: We have analyzed the potential regulatory aspects and are very confident that we will be able to obtain all the necessary approvals in a timely manner.
The integration: As our consortium includes a Chinese state-owned strategic investor in the same industry and in adjacent industries, we envision that a transaction with our consortium will generate synergies for the Company, and we do not foresee any impediments to effective integration of our respective activities and organizations.
Timing and Due Diligence: The Consortium is prepared to move quickly to perform customary due diligence, negotiate and execute final transaction documentation and announce the proposed acquisition. This proposal is subject to the execution of definitive agreements, and the proposed price per share and other terms and conditions of this proposal are subject to satisfactory due diligence.
We are convinced that the acquisition of the Company as described in our proposal represents an attractive opportunity for the Company and its shareholders. Please contact Mr. Ke LEI at [email protected] or +86 139 0290 1093 as soon as possible to enable us to arrange discussions with a view to reaching agreement on the proposed acquisition.
We look forward to hearing from you and quickly starting due diligence and friendly negotiations.
Cordially,
RECCO Control Technology Pte. ltd.
Through: /s/ Ke LEI
Name: Ke LEI
Title: Director
Dazheng Group (hong kong) Investment Holding Company Limited
Through: /s/ Li Yu
Name: Li Yu
Title: President
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About the Consortium
The consortium is led by Recco Control Technology Pte. Ltd and Dazheng Group (hong kong) Investment Holdings Company Limited and include other members including a Chinese state-owned strategic investor in the same and adjacent sectors.
Contact:
Mr. Ke LEI, tel. +86 139 0290 1093
E-mail: [email protected]
This communication does not constitute an offer to buy or a solicitation of an offer to sell any securities. No tender offer for shares of Hollysys Automation Technologies Ltd. has not been launched to date.
Forward-looking statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations regarding future financial results, events, operations, services, development and potential of products, and statements regarding future performance. Forward-looking statements are generally identified by the words “believe”, “intend“, “will be“, “expect”, “anticipate”, “intend”, “estimate”, “plan” and similar expressions. Although Consortium management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the Consortium’s control. , which could cause actual results and developments to differ materially from those expressed, implied or projected in the forward-looking information and statements. Except as required by applicable law, the Consortium undertakes no obligation to update or revise any forward-looking information or statements.
DAZHENG SOURCE GROUP (HONG KONG) INVESTMENT HOLDINGS COMPANY LIMITED
