KongZhong (KZ) Enters $299M 'Going Private' Deal
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KongZhong Corporation (Nasdaq: KZ)- announced that it has entered into a definitive agreement and plan of merger (the "Merger Agreement") with Linkedsee Limited ("Parent") and Wiseman International Limited ("Merger Sub"), a wholly owned subsidiary of Parent, pursuant to which the Company will be acquired by an investor consortium in an all-cash transaction with a transaction value of approximately $299 million.
Pursuant to the terms of the Merger Agreement, at the effective time of the merger, each ordinary share of the Company issued and outstanding immediately prior to the effective time of the merger (each a "Share") will be cancelled in exchange for the right to receive $0.18875 in cash, and each American depositary share (each an "ADS") of the Company, representing 40 Shares, will be cancelled in exchange for the right to receive $7.55 in cash, except for (a) (i) Shares (including Shares represented by ADSs) owned by Mr. Leilei Wang, Chairman and Chief Executive Officer of the Company ("Mr. Wang") and certain of his affiliates, who will be rolled over in the transaction, (ii) Shares (including Shares represented by ADSs) owned by Parent, Merger Sub, the Company or any of their respective wholly-owned subsidiaries, and (iii) Shares (including Shares represented by ADSs) reserved but not yet allocated by the Company for settlement upon the exercise or vesting of any Company share awards, each of which will be cancelled without any conversion thereof or consideration paid therefor, and (b) Shares held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 238 of the Companies Law of the Cayman Islands (the "Dissenting Shares"), which will be cancelled in exchange for the right to receive the payment of fair value of the Dissenting Shares in accordance with Section 238 of the Companies Law of the Cayman Islands.
The merger consideration represents a premium of 17.8% to the closing price of the Company's ADSs on August 24, 2016, the last trading day prior to the Company's announcement of its receipt of a revised "going-private" proposal, a premium of 29.0% to the average closing price of the Company's ADSs during the 90 trading days prior to its receipt of the revised "going-private" proposal, and a premium of 13.4% to the closing price of the Company's ADSs on November 30, 2016, the last trading day prior to the this announcement.
The investor consortium comprises, among others, Mr. Wang, Gongqingcheng Wujiang Xingyao Investment Management Partnership (Limited Partnership), Hexie Chengzhang Phase II (Yiwu) Investment Center (Limited Partnership) and/or their respective affiliates.
The Company's board of directors (the "Board"), acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board (the "Special Committee"), approved the Merger Agreement and the merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its independent financial and legal advisors.
The merger is subject to customary closing conditions including the approval of the Merger Agreement by the affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the Company's shareholders convened to consider the approval of the Merger Agreement and the merger. Mr. Wang, his affiliates, IDG-Accel China Growth Fund II L.P., and IDG-Accel China Investors II L.P. have agreed to vote all of the Shares and ADSs they beneficially own, which represent approximately 24.7% of the voting rights attached to the outstanding Shares as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the merger. If completed, the merger will result in the Company becoming a privately-owned company and its ADSs will no longer be listed on the NASDAQ Stock Market.
Duff & Phelps, LLC is serving as independent financial advisor to the Special Committee, Skadden, Arps, Slate, Meagher & Flom LLP is serving as independent U.S. legal counsel to the Special Committee and Maples and Calder LLP is serving as independent Cayman Islands legal counsel to the Special Committee.
Davis Polk & Wardwell LLP is serving as U.S. legal counsel to the investor consortium and Walkers is serving as Cayman Islands legal counsel to the investor consortium.
Sullivan & Cromwell LLP is serving as U.S. legal counsel to the Company.
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