Ascendent Capital Partners Limited agreed to acquire Hollysys Automation Technologies Ltd. for approximately $1.5 billion.
December 10, 2023
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Ascendent Capital Partners (Asia) Limited agreed to acquire Hollysys Automation Technologies Ltd. (NasdaqGS:HOLI) for approximately $1.5 billion on December 11, 2023. The acquisition price is for $26.50 per share, representing a premium of 42% to the unaffected price of $18.66 as of August 23, 2023. The deal will be subject to shareholder approval by the Company and certain closing conditions, including customary regulatory approval. The Board of Directors of Hollysys (the "Board"), upon the unanimous recommendation of the Special Committee of Independent Directors, has given its unanimous approval for the transaction. As announced on December 13, 2023, Pursuant to equity commitment letters (the ?Equity Commitment Letters?) each dated December 11, 2023, ACP III committed to provide Parent, at or before the Effective Time, with an aggregate equity contribution equal to $70 million and Skyline Automation Technologies L.P., for which GPGP serves as the general partner, committed to provide Parent, at or prior to the Effective Time, with an aggregate equity contribution equal to $275 million. Concurrently with the execution of the Merger Agreement, pursuant to a commitment letter dated December 11, 2023, provided by Industrial Bank Co., Ltd. Hong Kong Branch to Merger Sub, the Lender has irrevocably committed to provide on the terms and subject to the conditions set forth in the Debt Commitment Letter, at or prior to the closing of the Merger, a term loan facility of up to $1.055 billion, subject to certain customary conditions. For 15 days following the execution of the Merger Agreement (Go-Shop Period), the Issuer has the right to initiate, solicit, and encourage alternative transaction proposals and enter into and maintain discussions or negotiations with respect to the transaction. Following the Go-Shop Period, the Issuer is permitted to terminate the Merger Agreement prior to receipt of the Shareholder Approval to accept a Superior Proposal, subject to the payment of a termination fee of $33 million. Ascendent Capital will pay a termination fee of $33 million. As of December 28, 2023, the record date of the extraordinary general meeting, the Ascendent Capital Partners's Securityholder beneficially owns 8,491,875 ordinary shares, which represent approximately 13.7% of the total issued and outstanding Shares. As on January 5, 2024, Hollysys Automation announced that it will hold an extraordinary general meeting on February 8, 2024, to consider and vote on, among other things, the proposal to authorize and approve the previously announced merger agreement. As of January 22, 2024, the transaction is expected to close in Q1, 2024. January 29, 2024, The Special Committee of Hollysys Automation Technologies Ltd. reiterated its unanimous recommendation that shareholders vote for the acquisition of the Company by Ascendent Capital Partners. The most recent discussions concluded with the determination by the Special Committee that the Dazheng proposal is not superior to the Ascendent acquisition. The Special Committee does not have confidence in the certainty of Dazheng?s equity financing nor its ability to successfully close a transaction. As of February 8, 2024, shareholders of Hollysys Automation Technologies have approved the transaction and as part of approval shareholders at the EGM additionally authorized and approved the appointment of each of Guanghua Miao, Ding Wei and Dennis Demiao Zhu to the board of directors (the "Board") of the Company as an independent director.
Deutsche Bank AG,acted as Financial advisor, Miranda So and Lijun (Annie) Yan, Jie Zhang and Kevin Zhang, Martin Rogers, Nick Benham, Aaron Ferner, Davis Polk & Wardwell, Mourant Ozannes (Hong Kong) LLP, and Haiwen & Partners are serving as legal advisors to Hollysys and Members of the Davis Polk team are based in the Hong Kong, Beijing and London offices. Morrison & Foerster LLP, Appleby and Zhong Lun Law Firm acted as legal advisor to Ascendent Capital Partners (Asia) Limited. Morrow Sodali LLC acted as proxy solicitor to Hollysys.
Hollysys Automation Technologies Ltd. is a provider of automation and control technologies, and products. The Company's segments include Industrial Automation (IA), Rail Transportation (rail), Mechanical and Electrical (M&E), and Miscellaneous. Its technologies are applied through its industrial automation solution suite, including the Distributed Control Systems, Programmable Logic Controller, Real-time Management Information System, HolliAS Asset Management System, Operator Training System, Batch Application Package, Advanced Process Control Package (HolliAS APC Suite), Safety Instrumentation System (SIS), railway signaling system of Train Control Center, Automatic Train Protection, Subway Supervisory and Control platform, nuclear power non-safety automation and control system HolliAs-NMS DCS and other products. It serves customers in the industrial, railway, subway, nuclear power, and mechanical and electronic industries in China, Southeast Asia, India, Europe and the Middle East.