Dang Yanbao, Chairman of China Baofeng and an executive Director, and Dang Ziwei entered into a scheme of agreement to acquire additional 30.09% stake in China Baofeng (International) Limited (SEHK:3966) for approximately HKD 520 million on June 17, 2020. Under the terms of the transaction, the buyers will acquire approximately 199 million shares for HKD 2.6 per share. The transaction consideration will be paid in cash and the offer price will not be increased. The transaction will be implemented by way of a scheme of arrangement in which the scheme shares will be cancelled upon completion. Prior to the transaction, Dang Ziwei holds approximately 460 million shares. Dang Zidong, Chief Executive Officer of China Baofeng, is acting in concert with the Offeror and holds 8 million shares in China Baofeng and will be cancelled upon the Scheme becoming effective. The buyers intends to finance the acquisition from internal resources. CLSA is satisfied that sufficient financial resources are available to the Offeror for satisfying its obligations in respect of the full implementation of the Proposal and the Scheme. The transaction is subject to the approval of 75% of both the scheme shareholders and independent shareholders of China Baofeng, the Grand Court’s sanction of the Scheme, and its confirmation of the reduction of the share capital of China Baofeng and the delivery to the Registrar of Companies in the Cayman Islands of a copy of the order of the Grand Court for registration and all necessary statutory or regulatory requirements or obligations in all relevant jurisdictions. The Directors (excluding members of the Independent Board Committee) believe that the terms of the Proposal and the Scheme are fair and reasonable and in the interests of the Shareholders as a whole. An Independent Board Committee, which comprises all the non-executive Directors who have no direct or indirect interest in the Proposal, namely, Cheng Hoo, Chung Kin Shun, Jimmy, Xia Zuoquan, Tyen Kan Hee, Anthony and Guo Xuewen, has been established by the Board. The Independent Board Committee, having considered the terms of the Proposal and having taken into account the opinion of the Independent Financial Adviser, and in particular the factors, reasons and recommendations of the Scheme Document, considers that, as far as the Independent Shareholders are concerned, the terms of the Proposal are fair and reasonable. Accordingly, it is recommended that at the Court Meeting, the Independent Shareholders and at the EGM, the Shareholders to vote in favour of the special resolution. On August 17, 2020, The shareholders of China Baofeng approved the proposed scheme. China Baofeng has applied to the Stock Exchange and the Stock Exchange has approved the withdrawal of the listing of the Shares on the Stock Exchange. The Scheme was sanctioned without modification by the Grand Court at the petition hearing on September 3, 2020. All Conditions of the Proposal and the Scheme have been fulfilled except registration which is expected to be completed by September 4, 2020 and therefore it is expected that the Scheme will become effective on September 4, 2020. CLSA Capital Markets Limited acted as financial advisor to buyers in the transaction. Somerley Capital Limited acted as independent financial adviser to the Independent Board Committee. Citic securities acted as financial advisor to Dang Yanbao and Dang Ziwei in transaction. Union Registrars Limited acted as the share registrar and transfer office.