IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Hollysys Automation Technologies / Event-Driven

Hollysys Automation Technologies (HOLI US)

<ul>
<li>Dazheng (without Recco) has returned with <a href="https://www.businesswire.com/news/home/20231224144642/en/Buyer-Consortium-Led-by-Dazheng-Group-Announces-Enhanced-All-Cash-Proposal-of-US29.00-Per-Share-to-Acquire-Hollysys" target="_blank" rel="noopener">a revised US$29.00 offer</a> for <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>, 9.4% higher than Ascendent Capital’s US$26.50 binding offer.</li>
<li>While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.</li>
<li>Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng's offer.  </li>
</ul>


Dazheng (without Recco) has returned with a revised US$29.00 offer for Hollysys Automation Technologies (HOLI US), 9.4% higher than Ascendent Capital’s US$26.50 binding offer.
While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.
Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng's offer.  


Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

<ul>
<li>Bloomberg reports that the Recco consortium is considering “a significantly higher” <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a> offer than Ascendent’s US$26.50 binding offer.</li>
<li>The Hollysys 6-K filling outlines the closing conditions - a simple majority YES vote, regulatory approvals, minimum net cash (waivable) and a 10% maximum dissent condition (waivable).  </li>
<li>Recco is a committed suitor and will not easily give up. The merger agreement clauses point to a Recco offer floor of US$27.03 and a ceiling of US$30.48.</li>
</ul>


Bloomberg reports that the Recco consortium is considering “a significantly higher” Hollysys Automation Technologies (HOLI US) offer than Ascendent’s US$26.50 binding offer.
The Hollysys 6-K filling outlines the closing conditions - a simple majority YES vote, regulatory approvals, minimum net cash (waivable) and a 10% maximum dissent condition (waivable).  
Recco is a committed suitor and will not easily give up. The merger agreement clauses point to a Recco offer floor of US$27.03 and a ceiling of US$30.48.


Hollysys (HOLI US): Merger Agreement Leaves the Door Ajar for a Higher Recco Offer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a> has agreed to be acquired by Ascendent Capital, the largest shareholder, for US$26.50, a 16.7% premium to the last close.   </li>
<li>The Board's claims of realising the highest shareholder value are not credible. The Board fails to explain why Ascendent’s offer is superior to Recco’s, although both have the same value.</li>
<li>Deal fatigue (the process first started in December 2020) and the 42% premium to the undisturbed price suggests meeting the simple majority threshold for a statutory merger is achievable.</li>
</ul>



Hollysys Automation Technologies (HOLI US) has agreed to be acquired by Ascendent Capital, the largest shareholder, for US$26.50, a 16.7% premium to the last close.   
The Board's claims of realising the highest shareholder value are not credible. The Board fails to explain why Ascendent’s offer is superior to Recco’s, although both have the same value.
Deal fatigue (the process first started in December 2020) and the 42% premium to the undisturbed price suggests meeting the simple majority threshold for a statutory merger is achievable.


Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

The Europe HY Trade Book for December 2023 includes current trade recommendations drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

  The Europe HY Trade Book for December 2023 includes current trade recommendations drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry. 

Europe HY Trade Book - December 2023 - Lucror Analytics

<ul>
<li>The <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a> Board has finally succumbed to shareholder pressure by targeting a special meeting of shareholders in the week commencing 22 January 2024.</li>
<li>The special meeting is a side event as the Board targets a binding proposal by mid-December, with some bidders proceeding to the confirmatory due diligence stage.</li>
<li>The BVI takeover structure and Hollysys’ undemanding valuation facilitate a competitive bidding process. A 10% uplift to the current highest offer (Recco’s US$26.50 offer) is possible.</li>
</ul>


The Hollysys Automation Technologies (HOLI US) Board has finally succumbed to shareholder pressure by targeting a special meeting of shareholders in the week commencing 22 January 2024.
The special meeting is a side event as the Board targets a binding proposal by mid-December, with some bidders proceeding to the confirmatory due diligence stage.
The BVI takeover structure and Hollysys’ undemanding valuation facilitate a competitive bidding process. A 10% uplift to the current highest offer (Recco’s US$26.50 offer) is possible.


Hollysys (HOLI US): Progress as a Binding Proposal Targeted for Mid-December

Canada

Bombardier Inc. manufactures private jets. The Company focuses on designing, manufacturing, and servicing business jets for multinational corporations, charter and fractional ownership providers, governments, and private individuals. Bombardier serves aviation industries worldwide.

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Bombardier (BBD/A CN)

Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

While higher, the Board has the basis not to deem Dazheng’s proposal superior. However, due to the risk that shareholders vote down its offer,...

Arun George

Hollysys (HOLI US): Merger Agreement Leaves the Door Ajar for a Higher Recco Offer

Bloomberg reports that the Recco consortium is considering “a significantly higher” offer. The merger agreement clauses point to a Recco offer...

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Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid

Despite a dubious sales process, deal fatigue and the 42% premium to the undisturbed price should help get the vote up. At the last close, the...

Arun George

Europe HY Trade Book - December 2023 - Lucror Analytics

The Europe HY Trade Book for December 2023 includes current trade recommendations drawn from our European HY coverage universe, along with...

Lucror Analytics

Hollysys (HOLI US): Progress as a Binding Proposal Targeted for Mid-December

An SEC filing on Friday disclosed that Ascendent Capital (13.7% shareholder) entered a confidentiality agreement with Hollysys, which includes a...

Arun George

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