Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The SEC has finalised the Holding Foreign Companies Accountable Act rules. Under the current timeframe, the SEC may force the delisting of foreign companies in three years if in contravention.</li>
<li>Amid <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>'s intention to delist from the US, the CSRC refutes it is pushing for VIEs to drop their listings in the United States.</li>
<li>Expect continued volatility as the ~248 US-listed China plays seek to avoid delisting if they don’t comply with auditing rules.</li>
</ul>


The SEC has finalised the Holding Foreign Companies Accountable Act rules. Under the current timeframe, the SEC may force the delisting of foreign companies in three years if in contravention.
Amid DiDi Global (DIDI US)'s intention to delist from the US, the CSRC refutes it is pushing for VIEs to drop their listings in the United States.
Expect continued volatility as the ~248 US-listed China plays seek to avoid delisting if they don’t comply with auditing rules.


Delisting Chinese ADRs: High Foreign-Holding, With No Fixed Abode, Most At Risk

Hollysys Automation Technologies / Event-Driven

Hollysys Automation Technologies (HOLI US)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a> has officially <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=116254323&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-11-15&amp;CK=1357450" target="_blank" rel="noopener">acknowledged</a> a non-binding Offer from <a href="https://www.smartkarma.com/entities/zhejiang-longsheng-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1751:1" rel="noopener">Zhejiang Longsheng Group Co., (600352 CH)</a> and Loyal Valley Innovation Capital at US$24/share. </li>
<li>The replacement of Hollysys auditor (EY) and its current inability to file its annual report remain ongoing.</li>
<li>Such accounting-related issues will constrain the timing, negotiation, and entry into of any definitive acquisition agreement.</li>
</ul>



Hollysys Automation Technology (HOLI US) has officially acknowledged a non-binding Offer from Zhejiang Longsheng Group Co., (600352 CH) and Loyal Valley Innovation Capital at US$24/share. 
The replacement of Hollysys auditor (EY) and its current inability to file its annual report remain ongoing.
Such accounting-related issues will constrain the timing, negotiation, and entry into of any definitive acquisition agreement.


Hollysys (HOLI US): The Subtle Third Offer

iClick Interactive Asia Group / Event-Driven

<p>In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the <a href="https://en.wikipedia.org/wiki/Holding_Foreign_Companies_Accountable_Act" target="_blank" rel="noopener">Holding Foreign Companies Accountable Act</a> last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.</p>
<p>More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for <a href="https://www.smartkarma.com/entities/iclick-interactive-asia-group-limited" target="_blank" data-smartkarma-citation="entities:27314:1" rel="noopener">iClick Interactive Asia Group (ICLK US)</a> a little unusual.</p>
<p>iClick <a href="https://ir.i-click.com/2021-09-24-iClick-Interactive-Asia-Group-Limited-Announces-Receipt-of-a-Preliminary-Non-Binding-Indicative-Proposal-to-Acquire-the-Company" target="_blank" rel="noopener">announced</a> on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.</p>
<p>That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.</p>
<p>Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.</p>
<p>Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.</p>
<p>In addition, <a href="https://www.smartkarma.com/entities/baozun" target="_blank" data-smartkarma-citation="entities:29712:1" rel="noopener">Baozun (9991 HK)</a> controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. </p>
<p>But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, to make a counteroffer.</p>
<p>More below the fold.</p>

In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the Holding Foreign Companies Accountable Act last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.
More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for iClick Interactive Asia Group (ICLK US) a little unusual.
iClick announced on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.
That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.
Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.
Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.
In addition, Baozun (9991 HK) controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. 
But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as Tencent (700 HK), to make a counteroffer.
More below the fold.

IClick(ICLK US): PAG & Oasis Shake The Trees

<div>
<p><a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener"></a>Before launching into the latest news for <a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a>, one of the leading automation control system solutions provider in China, below is a summary of recent key "events":</p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 164.564px;">
<h3>Date</h3>
</td>
<td style="width: 581.448px;">
<h3>Data in the Date</h3>
</td>
</tr>
<tr>
<td style="width: 164.564px;">7-Dec-20</td>
<td style="width: 581.448px;">A consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management <a href="http://hollysys.investorroom.com/2020-12-10-Hollysys-Announces-Receipt-of-a-Non-Binding-Going-Private-Proposal" target="_blank" rel="noopener">pitched</a> an unsolicited US$15.47/share cash Offer. The Offer was rejected</td>
</tr>
<tr>
<td style="width: 164.564px;">8-Jan-21</td>
<td style="width: 581.448px;">The Offer was summarily <a href="http://hollysys.investorroom.com/2021-01-08-Hollysys-Board-of-Directors-Rejects-Unsolicited-Offer" target="_blank" rel="noopener">rejected</a>
</td>
</tr>
<tr>
<td style="width: 164.564px;">1-Feb-21</td>
<td style="width: 581.448px;">The consortium bumped its Offer to acquire the company to US$17.10/share on the <a href="http://hollysys.investorroom.com/2021-02-01-Hollysys-Board-of-Directors-to-Review-Revised-Unsolicited-Proposal" target="_blank" rel="noopener">1 February</a>.</td>
</tr>
<tr>
<td style="width: 164.564px;">9-Mar-21</td>
<td style="width: 581.448px;">Hollysys <a href="http://hollysys.investorroom.com/2021-03-15-Hollysys-Board-of-Directors-Received-a-Notice-From-Hollysys-Committee-on-Trust-Interests" target="_blank" rel="noopener">announced</a> a legal action had commenced in the Hong Kong High Court against Shao and Ace Lead, concerning the legal dispute over the beneficial ownership of the Hollysys' shares held by Ace Lead and the beneficial ownership of the shares of Ace Lead held by Shao.</td>
</tr>
<tr>
<td style="width: 164.564px;">14-Mar-21</td>
<td style="width: 581.448px;">In a <a href="https://www.businesswire.com/news/hk-zh/20210314005017/en/Shao-Baiqing-and-Ace-Lead-Profits-Limited-Won-Preliminary-Victory-Against-Hollysys-Automation-Technologies-in-the-BVI" target="_blank" rel="noopener">press release</a>, Shao Baiqing and Ace Lead Profits allege they had won a preliminary victory against Hollysys.</td>
</tr>
<tr>
<td style="width: 164.564px;">16-Mar-21</td>
<td style="width: 581.448px;">Hollysys countered <a href="http://hollysys.investorroom.com/2021-03-16-Hollysys-Response-to-Ace-Lead-Profits-Limited-Misleading-Press-Release" target="_blank" rel="noopener">these</a> statements re: a preliminary victory were highly misleading.</td>
</tr>
<tr>
<td style="width: 164.564px;">13-Apr-21</td>
<td style="width: 581.448px;">
<div>
<p>CPE has <a href="https://www.businesswire.com/news/home/20210413006213/en/Buyer-Consortium-Comments-on-Recent-Financial-and-Operational-Information-Released-by-Hollysys-Automation-Technologies" target="_blank" rel="noopener">critiqued</a> Hollysys' 1H21 results (to 31 December 2020), and concluded that: "It is clear that existing management and the board of directors of the Company do not know how to run the business successfully"</p>
</div>
</td>
</tr>
<tr>
<td style="width: 164.564px;">29-Jun-21</td>
<td style="width: 581.448px;">Baiqing Shao, Ace Funds, and Chinese PE outfit CPE <a href="https://www.businesswire.com/news/home/20210628005886/en/Buyer-Consortium-Commences-a-Solicitation-of-Consents-from-Shareholders-of-Hollysys-Automation-Technologies-to-Seek-Support-on-Shareholder-Resolutions-Regarding-its-17.10-Per-Share-in-Cash-Acquisition-Proposal" target="_blank" rel="noopener">commenced</a> a solicitation of consents from shareholders of Hollysys to seek support on its $17.10/share in cash proposal.</td>
</tr>
<tr>
<td style="width: 164.564px;">1-Jul-21</td>
<td style="width: 581.448px;">
<p>Hollysys urges shareholders to take <a href="http://hollysys.investorroom.com/2021-07-01-Hollysys-Urges-Shareholders-to-Take-No-Action-on-Consortiums-Consent-Solicitation" target="_blank" rel="noopener">no action</a> on the consortium's consent solicitation</p>
</td>
</tr>
<tr>
<td style="width: 164.564px;">8-Jul-21</td>
<td style="width: 581.448px;">The consortium reminds Hollysys shareholders to sign the consents by the <a href="https://www.businesswire.com/news/home/20210707005961/en/Buyer-Consortium-Warns-Hollysys-Shareholders-Not-to-Be-Misled-by-Company%E2%80%99s-Continuing-Incomplete-Disclosure-and-Delaying-Tactics" target="_blank" rel="noopener">22 July</a>. </td>
</tr>
<tr>
<td style="width: 164.564px;">16-Jul-21</td>
<td style="width: 581.448px;">Hollysys sets <a href="https://en.prnasia.com/releases/global/hollysys-sets-record-straight-on-consortium-s-consent-solicitation-325965.shtml" target="_blank" rel="noopener">record straight</a> on consortium's consent solicitation</td>
</tr>
<tr>
<td style="width: 164.564px;">22-Jul-21</td>
<td style="width: 581.448px;">The buyer consortium <a href="https://www.businesswire.com/news/home/20210721006041/en/Buyer-Consortium-Extends-Deadline-for-HollySys-Shareholders-to-Submit-Consents-to-August-20-2021" target="_blank" rel="noopener">extends</a> the deadline for Hollysys' shareholders to submit consents to August 20, 2021.</td>
</tr>
<tr>
<td colspan="2" style="width: 164.564px;"><em>Source: mainly Hollysys's press releases and SEC filings</em></td>
</tr>
</tbody>
</table>
<div>
<p>Quite the saga - talk about bad blood between the current board and the former chairman/CEO.</p>
<h3>The New News!</h3>
</div>
<div>
<p>Hollysys has now <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=116032020&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-08-02&amp;CK=1357450" target="_blank" rel="noopener">announced</a> it is in the process of evaluating a non-binding offer from Superior Emerald, a company controlled by Ascendent Capital Partners, and Changli Wang, the founder of Hollysys (who retired in 2013 "with honor") to acquire all of the outstanding ordinary shares of Hollysys for US$23.00/share in cash.</p>
<p>That's a 34.5% premium to the CPE/Shao consortium proposal, and a ~84% premium to the undisturbed price.</p>
<p>More below the fold.</p>
</div>
</div>


Before launching into the latest news for Hollysys Automation Technology (HOLI US), one of the leading automation control system solutions provider in China, below is a summary of recent key "events":




Date


Data in the Date



7-Dec-20
A consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management pitched an unsolicited US$15.47/share cash Offer. The Offer was rejected


8-Jan-21
The Offer was summarily rejected



1-Feb-21
The consortium bumped its Offer to acquire the company to US$17.10/share on the 1 February.


9-Mar-21
Hollysys announced a legal action had commenced in the Hong Kong High Court against Shao and Ace Lead, concerning the legal dispute over the beneficial ownership of the Hollysys' shares held by Ace Lead and the beneficial ownership of the shares of Ace Lead held by Shao.


14-Mar-21
In a press release, Shao Baiqing and Ace Lead Profits allege they had won a preliminary victory against Hollysys.


16-Mar-21
Hollysys countered these statements re: a preliminary victory were highly misleading.


13-Apr-21


CPE has critiqued Hollysys' 1H21 results (to 31 December 2020), and concluded that: "It is clear that existing management and the board of directors of the Company do not know how to run the business successfully"




29-Jun-21
Baiqing Shao, Ace Funds, and Chinese PE outfit CPE commenced a solicitation of consents from shareholders of Hollysys to seek support on its $17.10/share in cash proposal.


1-Jul-21

Hollysys urges shareholders to take no action on the consortium's consent solicitation



8-Jul-21
The consortium reminds Hollysys shareholders to sign the consents by the 22 July. 


16-Jul-21
Hollysys sets record straight on consortium's consent solicitation


22-Jul-21
The buyer consortium extends the deadline for Hollysys' shareholders to submit consents to August 20, 2021.


Source: mainly Hollysys's press releases and SEC filings




Quite the saga - talk about bad blood between the current board and the former chairman/CEO.
The New News!


Hollysys has now announced it is in the process of evaluating a non-binding offer from Superior Emerald, a company controlled by Ascendent Capital Partners, and Changli Wang, the founder of Hollysys (who retired in 2013 "with honor") to acquire all of the outstanding ordinary shares of Hollysys for US$23.00/share in cash.
That's a 34.5% premium to the CPE/Shao consortium proposal, and a ~84% premium to the undisturbed price.
More below the fold.



Hollysys (HOLI US): Competing Proposal From Founder

Last Week in Event SPACE: Capitaland, Boral, Milton/WHSP, Santos/Oil Search, Education Profit Ban

United States

Hollysys Automation Technologies Ltd. manufactures automation and control systems.  The Company produces process, industrial, rail and subway, and nuclear power plant automation equipment.

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Hollysys Automation Technologies (HOLI US)

Delisting Chinese ADRs: High Foreign-Holding, With No Fixed Abode, Most At Risk

This does not strike me as the time to be bargain hunting. Not when there remains confusion as to how and when delistings will unfold. The focus...

David Blennerhassett

Hollysys (HOLI US): The Subtle Third Offer

Hollysys, even without thinking about a deal, is cheap. And you have two friendly parties pitching Offers in excess of the last traded price. On...

David Blennerhassett

IClick(ICLK US): PAG & Oasis Shake The Trees

Buying around here is probably going to have limited downside. I think PAG/Oasis' intent is to shake out potential suitors - including the co...

David Blennerhassett

Hollysys (HOLI US): Competing Proposal From Founder

Hollysys is cheap, and you have two parties pitching Offers well in excess of the last traded price. Yet this is a sordid affair, with two court...

David Blennerhassett

Last Week in Event SPACE: Capitaland, Boral, Milton/WHSP, Santos/Oil Search, Education Profit Ban

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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