Haier Smart Home Co., Ltd. (SHSE:600690) signed an agreement to acquire the remaining 54.32% stake in Haier Electronics Group Co., Ltd. (SEHK:1169) for HKD 51.9 billion on July 30, 2020. Under the terms of transaction, each shareholder of Haier Electronics Group will receive 1.6 new Haier Smart Home H shares and cash payment of HKD 1.95 per shares, which is equivalent to combined value of approximately HKD 31.51 for each scheme share. Fractional entitlements of scheme shareholders to Haier Smart Home H shares will be aggregated and retained for the benefit. The cash component of the transaction is expected to be funded from external debt financing primarily and also from internal resources. After the completion of this transaction, Haier Electronics Group Co., Ltd will be delisted from the Hong Kong Stock Exchange and will become a wholly-owned subsidiary of Haier Smart Home Co., Ltd. The employees of Haier Electronics Group Co., Ltd will continue to work in Haier Electronics Group Co., Ltd in accordance with their labor contract.

The transaction is subject to customary closing conditions, including approval by shareholders of Haier Smart Home and Haier Electronics Group, approval by disinterested scheme shareholders holding at least 75% of the votes attaching to the disinterested scheme shares that are voted either in person or by proxy at the Court meeting, passing of a special resolution by a majority of not less than three-fourths of the votes cast by the HEG shareholders, sanction of the scheme (with or without modifications) by the Court, all necessary third party consents, approval of CSRC for issuance of consideration shares, approval from the listing committee of the Stock Exchange approving the listing of Haier Smart Home H shares on the Stock Exchange and approval from governmental or regulatory bodies. As of August 22, 2020, the transaction has been reviewed and approved at the tenth meeting of the tenth Board of Directors of Haier Smart Home and the ninth meeting of the tenth Board of Supervisors of Haier Smart Home. On September 1, 2020, the shareholders of Haier Smart Home Co., Ltd. approved the transaction. As of October 30, 2020, CSRC approved the issuance of consideration shares. However the condition relating to approval of the Listing Committee of the Stock Exchange for the listing of H Shares on the Stock Exchange to be issued as consideration for the cancellation of the scheme shares remains to be outstanding. On 13 November 2020, HSH received the letter from the Stock Exchange confirming that they have no further comments on the Listing Document and approving in principle the listing of the HSH H Shares on the Stock Exchange. Hence, all the conditions to the transactions have been fulfilled. An Independent Board Committee of all non-Executive Directors and independent non-Executive Directors of Haier Electronics Group who are not interested in scheme has been established to make a recommendation to the disinterested scheme shareholders. As on December 9, 2020, the resolution proposed at the Court Meeting to approve the Scheme was duly passed. The Scheme was sanctioned (without modification) by the Court on December 18, 2020. As on December 20, 2020, it is expected that the Scheme will become effective on December 21, 2020, after fulfilling all the conditions. The Scheme will lapse if it does not become effective on or before 30 June 2021.

UBS Securities Hong Kong Limited acted as financial advisor for Haier Electronics Group. Somerley Capital Limited acted as financial advisor to the independent Board committee of Haier Electronics Group. Zhou Xudong and Wang Feng of Zheshang Securities Co., Ltd. (SHSE:601878), Zhang Shujian, Hu Xiaojun, Li Yang and Duan Yining of China International Capital Corporation Limited (SEHK:3908) acted as financial advisors, Zhang Yongliang, Song Yanyan and Zhang Ruoran of Beijing King & Wood Law Firm acted as legal advisors and Wu Shaoqi and Wang Chong of Ernst & Young Hua Ming Certified Public Accountants acted as accountants to Haier Smart Home. China International Capital Corporation Hong Kong Securities Limited, J.P. Morgan Securities (Asia Pacific) Limited and Platinum Securities Company Limited acted as financial advisors to Haier Smart Home. Amy Lo, Frank Yuen, Ryan Siu, Jean Thio, Xiang Tianning, Wu Ha, Jeffrey Lee, Connie Heng, David Tsai, Mark Chan, Markus Stephanblome, Philipp Klöckner and Rocky Mui of Clifford Chance LLP acted as legal advisors to Haier Smart Home Co., Ltd. Gwen Wong of Sullivan & Cromwell (Hong Kong) LLP represents CICC and J.P. Morgan.

Haier Smart Home Co., Ltd. (SHSE:600690) completed the acquisition of remaining 54.32% stake in Haier Electronics Group Co., Ltd. (SEHK:1169) on December 21, 2020. Certificates for the consideration shares are expected to be dispatched on or before December 22, 2020 and Cheques for cash consideration will be dispatched on or before December 31, 2020. Haier Electronics is expected to delist from December 23, 2020.