Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hollysys Automation Technologies / Event-Driven

<ul>
<li>Despite <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US)</a> receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. </li>
<li>But Hollysys' board stonewalled the SGM, pinning its reason - and a proposed injunction - on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. </li>
<li>That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.</li>
</ul>


Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. 
But Hollysys' board stonewalled the SGM, pinning its reason - and a proposed injunction - on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. 
That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.


Market & Forensics Analyst, Beat the Street

Nimish Maheshwari

Market & Forensics Analyst

Beat the Street

Beat The Street was founded by Nimish Maheshwari and Sudarshan Bhandari, both of whom are Chartered Accountants by Profession, known for their expert analysis in the fields of Business, Sectoral analysis, and Corporate governance.

With a strong social media presence of 45,000+ Subscribers across various platforms, they are considered trusted voices in the industry. Their insights and analysis have been featured in some of India’s most prominent publications, including the Economic Times, Dalal Street Investment Journal, The Morning Context, and The Ken.

Their analysis on Bankrupt & Insolvent companies has been instrumental in saving investors from significant losses. They have a keen eye for identifying red flags and has identified exclusive redflags earlier in Vedanta, Nykaa, Dhani Services, Adani and many more.

Read Business Not Stock Prices

<ul>
<li>
Kiri Industries has signed a deal to sell its 37.6% stake in DyStar Global to Zhejiang Longsheng for US$697 million (~INR 5,800 crore), concluding a decade-long Singapore court battle.</li>
<li>The payout is multiple times Kiri’s current market cap and marks one of the strongest minority shareholder wins globally.</li>
<li>The DyStar exit removes litigation overhang and hands Kiri a war chest. Now, execution of the copper and fertilizer project will define the future of the company.</li>
</ul>



Kiri Industries has signed a deal to sell its 37.6% stake in DyStar Global to Zhejiang Longsheng for US$697 million (~INR 5,800 crore), concluding a decade-long Singapore court battle.
The payout is multiple times Kiri’s current market cap and marks one of the strongest minority shareholder wins globally.
The DyStar exit removes litigation overhang and hands Kiri a war chest. Now, execution of the copper and fertilizer project will define the future of the company.


Kiri’s $700 Million Exit From DyStar – What Next?

<ul>
<li>On the 8th February 2024, 85% of <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US</a><a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">)</a> shareholders present and via proxy, <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=318042742&amp;type=PDF&amp;symbol=HOLI&amp;cdn=6d522b9b90b026dc73ccdc7b55e77ef2&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2024-02-08" target="_blank" rel="noopener">voted</a> for Ascendent Capital's Offer. After three-plus years, the end was finally in sight.</li>
<li>Then crickets. The merger was to complete in the 1Q. On the 15th April, HOLI released an accountant resignation notice. No word on dissenters or regulatory approvals. Shares sold off. </li>
<li>
The accountant resignation is a nothing burger. HOLI should lift their game and provide more transparency on the outstanding merger conditions. Still, the spread is attractive. This is a buy. </li>
</ul>


On the 8th February 2024, 85% of Hollysys Automation (HOLI US) shareholders present and via proxy, voted for Ascendent Capital's Offer. After three-plus years, the end was finally in sight.
Then crickets. The merger was to complete in the 1Q. On the 15th April, HOLI released an accountant resignation notice. No word on dissenters or regulatory approvals. Shares sold off. 

The accountant resignation is a nothing burger. HOLI should lift their game and provide more transparency on the outstanding merger conditions. Still, the spread is attractive. This is a buy. 


<ul>
<li>Back on the 26th January, proxy advisor Glass Lewis issued a report recommending <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US)</a> shareholders vote against Ascendent's merger. Two days later, ISS shared a similar view.</li>
<li>Both proxy advisors should read HOLI's latest proxy statements. Negotiating with Dazheng is like something out of the wild west. The Special Committee gave the consortium considerable latitude. </li>
<li>Passive investors will follow GL/ISS, which could jeopardize the vote on the 8th Feb. It should not come to this. </li>
</ul>


Back on the 26th January, proxy advisor Glass Lewis issued a report recommending Hollysys Automation (HOLI US) shareholders vote against Ascendent's merger. Two days later, ISS shared a similar view.
Both proxy advisors should read HOLI's latest proxy statements. Negotiating with Dazheng is like something out of the wild west. The Special Committee gave the consortium considerable latitude. 
Passive investors will follow GL/ISS, which could jeopardize the vote on the 8th Feb. It should not come to this. 


Hollysys (HOLI US): ISS/Glass Lewis Should Reverse Their Position

<ul>
<li>On the 26th January, proxy advisor Glass Lewis issued a report recommending <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys (HOLI US)</a> shareholders vote against Ascendent's merger. Two days later, ISS issued a similar opinion.  </li>
<li>Both reports targeted HOLI's efforts to maximize an Offer price. Elsewhere, some salient points were raised. But overall, there exists an air of naivety in their conclusions.</li>
<li>HOLI's EGM is scheduled for February 8th. The merger consideration of US$26.50/share is in line with, or above, the estimated values of Deutsche Bank's fairness opinion.</li>
</ul>


On the 26th January, proxy advisor Glass Lewis issued a report recommending Hollysys (HOLI US) shareholders vote against Ascendent's merger. Two days later, ISS issued a similar opinion.  
Both reports targeted HOLI's efforts to maximize an Offer price. Elsewhere, some salient points were raised. But overall, there exists an air of naivety in their conclusions.
HOLI's EGM is scheduled for February 8th. The merger consideration of US$26.50/share is in line with, or above, the estimated values of Deutsche Bank's fairness opinion.


Hollysys (HOLI US): Critiquing ISS & Glass Lewis' Critiques

China

Zhejiang Longsheng Group Co., Ltd. manufactures a variety of dyes including high intensity and rapid-dying Lonsperse Dye. The Company sells its products domestically and exports worldwide.

Zhejiang Longsheng Group Co., (600352 CH)

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Zhejiang Longsheng Group Co., (600352 CH)

2024 High Conviction: Buy Hollysys

That injunction was dismissed last week. An SGM will now be held late Janaury. A firm merger proposal is expected in the middle of next month. This...

David Blennerhassett

Kiri’s $700 Million Exit From DyStar – What Next?

Kiri Industries sells stake in DyStar Global for $697 million, marking a major win for minority shareholders and providing a financial boost for...

Nimish Maheshwari

Hollysys (HOLI US): This Is A Buy

Trading wide at a gross spread of 7.4% to the US$26.50 Offer terms. Take advantage of investor fatigue, and buy HOLI here.

David Blennerhassett

Hollysys (HOLI US): ISS/Glass Lewis Should Reverse Their Position

I've been asked whether dissenting shareholders can vote at an EGM at these US-listed China play mergers. The answer is yes, as the rights that...

David Blennerhassett

Hollysys (HOLI US): Critiquing ISS & Glass Lewis' Critiques

HOLI is cheap, not only at US$26.50, but also US$29/share. That's all known. I'd take a firm Offer at US$26.50. So would fatigued shareholders.

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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2024 High Conviction: Buy Hollysys

That injunction was dismissed last week. An SGM will now be held late Janaury. A firm merger proposal is expected in the middle of next month. This...

David Blennerhassett

Kiri’s $700 Million Exit From DyStar – What Next?

​Kiri Industries sells stake in DyStar Global for $697 million, marking a major win for minority shareholders and providing a financial boost for...

Nimish Maheshwari

Hollysys (HOLI US): This Is A Buy

Trading wide at a gross spread of 7.4% to the US$26.50 Offer terms. Take advantage of investor fatigue, and buy HOLI here.

David Blennerhassett

Hollysys (HOLI US): ISS/Glass Lewis Should Reverse Their Position

I've been asked whether dissenting shareholders can vote at an EGM at these US-listed China play mergers. The answer is yes, as the rights that...

David Blennerhassett

Hollysys (HOLI US): Critiquing ISS & Glass Lewis' Critiques

HOLI is cheap, not only at US$26.50, but also US$29/share. That's all known. I'd take a firm Offer at US$26.50. So would fatigued shareholders.

David Blennerhassett

Kiri Industries sells stake in DyStar Global for $697 million, marking a major win for minority shareholders and providing a financial boost for...