Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 27 September, Jingang Trade, a company wholly-owned by <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>, and the Zhang Group <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0927/2020092700065.pdf" target="_blank" rel="noopener">entered</a> into a Share Subscription Agreement (SSA) with the Offeror,  a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group would transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror would hold 43.75% and be obligated to make a Mandatory General Offer (MGO) for all shares not owned. The MGO would be HK$1.132/share (an 11% premium to last close). The Offer price will not be increased.</p>
<p>The MGO is subject to a 50% (of all shares out) acceptance condition.</p>
<p>The SSA was completed on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0111/2021011100722.pdf" target="_blank" rel="noopener">11 January</a> and the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700009.pdf" target="_blank" rel="noopener">Composite Doc</a> was despatched last night. The first close is the 8 February.</p>
<p>The Offeror has received 14 irrevocable undertakings (IU) from shareholders to accept the Offer in respect of 1,377,008,000 shares or 52.83% of shares out. Therefore, once the IU shareholders tender, the acceptance condition will have been met. Accordingly, the Offer is expected to become unconditional on or prior to the seventh day after the date of this Composite Doc.</p>
<p>The percentage of the Offer Shares made up by all of the IU shares is ~93.92%, therefore compulsory acquisition under section 88 of the Cayman Islands Companies Act and Rule 2.11 of the Takeovers Code will have been met.</p>
<p>As always, more below the fold.</p>
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On the 27 September, Jingang Trade, a company wholly-owned by Inner Mongolia Yili Industrial Group (A) (600887 CH), and the Zhang Group entered into a Share Subscription Agreement (SSA) with the Offeror,  a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group would transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror would hold 43.75% and be obligated to make a Mandatory General Offer (MGO) for all shares not owned. The MGO would be HK$1.132/share (an 11% premium to last close). The Offer price will not be increased.
The MGO is subject to a 50% (of all shares out) acceptance condition.
The SSA was completed on the 11 January and the Composite Doc was despatched last night. The first close is the 8 February.
The Offeror has received 14 irrevocable undertakings (IU) from shareholders to accept the Offer in respect of 1,377,008,000 shares or 52.83% of shares out. Therefore, once the IU shareholders tender, the acceptance condition will have been met. Accordingly, the Offer is expected to become unconditional on or prior to the seventh day after the date of this Composite Doc.
The percentage of the Offer Shares made up by all of the IU shares is ~93.92%, therefore compulsory acquisition under section 88 of the Cayman Islands Companies Act and Rule 2.11 of the Takeovers Code will have been met.
As always, more below the fold.






Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded

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<p>On <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101776.pdf" target="_blank" rel="noopener">31 July 2020</a>, dairy farmer <a href="https://www.smartkarma.com/entities/china-zhongdi-dairy-holdings" target="_blank" data-smartkarma-citation="entities:22662:1" rel="noopener">China Zhongdi Dairy (1492 HK)</a> entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>,  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200704.pdf" target="_blank" rel="noopener">completed</a> on 12 August.</p>
<p>Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. </p>
<h3>The New News</h3>
<p>Jingang Trade and the Zhang Group have now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0927/2020092700065.pdf" target="_blank" rel="noopener">entered</a> into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.</p>
<p>The SSA is primarily subject to independent shareholder approval and China's SAMR.</p>
<p>The MGO is subject to a 50% (of all shares out) acceptance condition.</p>
<p>Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.</p>
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<p>This transaction is highly reminiscent of the recent <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0906/2020090600009.pdf" target="_blank" rel="noopener">conditional voluntary general offer</a> for <a href="https://www.smartkarma.com/entities/yuanshengtai-dairy-farm-ltd" target="_blank" data-smartkarma-citation="entities:17091:1" rel="noopener">Yuanshengtai Dairy Farm (1431 HK)</a> from <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a> discussed in <em><a href="https://skr.ma/uF9jE" target="_blank" rel="noopener">YST Dairy (1431 HK): VGO From China Feihe</a></em>. </p>
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<p>As always, more below the fold.</p>
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On 31 July 2020, dairy farmer China Zhongdi Dairy (1492 HK) entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by Inner Mongolia Yili Industrial Group (A) (600887 CH),  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was completed on 12 August.
Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. 
The New News
Jingang Trade and the Zhang Group have now entered into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.
The SSA is primarily subject to independent shareholder approval and China's SAMR.
The MGO is subject to a 50% (of all shares out) acceptance condition.
Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.


This transaction is highly reminiscent of the recent conditional voluntary general offer for Yuanshengtai Dairy Farm (1431 HK) from China Feihe (6186 HK) discussed in YST Dairy (1431 HK): VGO From China Feihe. 


As always, more below the fold.


Zhongdi Dairy (1492 HK): Possible MGO from Yili

China

China ZhongDi Dairy Holdings Company Limited is primarily involved in operating dairy farms to produce raw milk. The company raises and breeds dairy cows, produces raw milk, sells reproduced heifers, and engages in the import and sale of cows and feeds, along with providing import agency services. It was founded in 2002 and is headquartered in Beijing, the People's Republic of China.

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China ZhongDi Dairy (1492 HK)

Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded

Done deal. Expect shares to be suspended next month. Buy a spread or two below terms if available - currently trading through terms at HK$1.15...

David Blennerhassett

Zhongdi Dairy (1492 HK): Possible MGO from Yili

After entering into a trading halt on the 4 September "pursuant to The Codes on Takeovers and Mergers and Share Buy-backs", Yuanshengtai Dairy...

David Blennerhassett

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