Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Yixin (2858 HK)’s Downstream Unconditional MGO

Tencent's Potential Downstream Offer For Yixin

Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO

Yixin Supported By Indicative Chain Principle Price

Tencent's Offer For Bitauto Is A Done Deal

Quiddity Advisors

Event-Driven

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<p>Last Friday (12 June), <a href="https://www.smartkarma.com/entities/bitauto-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:12004:1" rel="noopener">Bitauto Holdings (BITA US)</a> <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-enters-definitive-agreement-going-private-transaction" target="_blank" rel="noopener">announced</a> it had entered into a definitive Merger Agreement with <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hammer Capital at US$16/ADS, a ~16.4% premium to the undisturbed price and a 35.1% premium to the 30-day VWAP. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal needs two-thirds. This appears to be a done deal.</p>
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<p>Bitauto owns ~43.72% of shares out in <a href="https://www.smartkarma.com/entities/yixin-group-ltd" target="_blank" data-smartkarma-citation="entities:26008:1" rel="noopener">Yixin Group Ltd (2858 HK)</a>. Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Should the BITA proposal complete, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0615/2020061501449.pdf" target="_blank" rel="noopener">unconditional mandatory general</a> offer. </p>
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<p>The consideration obligated under Hong Kong's chain principle rule are generally low-balled. The announcement indicates an MGO price of HK$1.9088, roughly at Yixin's closing price, and below my earlier estimate of HK$1.96/share. There are subtle reasons for the difference. It is not the Tencent consortium's intention to delist Yixin.</p>
<p>But the Offeror consortium, currently holding 77.11% of shares out in Yixin, may be in contravention of its public float, should the Bitauto merger complete, and shares are tendered into the MGO.</p>
<p>As always, more below the fold.</p>
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<p><em>Quiddity's <a href="https://skr.ma/7bVPk" target="_blank" rel="noopener">Quiddity Hong Kong M&amp;A Guide 2019</a> contains guidelines to the relevant rules, regulations, documentation, and pointers to the Hong Kong M&amp;A landscape.</em></p>
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Last Friday (12 June), Bitauto Holdings (BITA US) announced it had entered into a definitive Merger Agreement with Tencent Holdings (700 HK) and Hammer Capital at US$16/ADS, a ~16.4% premium to the undisturbed price and a 35.1% premium to the 30-day VWAP. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal needs two-thirds. This appears to be a done deal.



Bitauto owns ~43.72% of shares out in Yixin Group Ltd (2858 HK). Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Should the BITA proposal complete, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an unconditional mandatory general offer. 


The consideration obligated under Hong Kong's chain principle rule are generally low-balled. The announcement indicates an MGO price of HK$1.9088, roughly at Yixin's closing price, and below my earlier estimate of HK$1.96/share. There are subtle reasons for the difference. It is not the Tencent consortium's intention to delist Yixin.
But the Offeror consortium, currently holding 77.11% of shares out in Yixin, may be in contravention of its public float, should the Bitauto merger complete, and shares are tendered into the MGO.
As always, more below the fold.



Quiddity's Quiddity Hong Kong M&amp;A Guide 2019 contains guidelines to the relevant rules, regulations, documentation, and pointers to the Hong Kong M&amp;A landscape.



Yixin (2858 HK)'s Indicative Downstream Offer