China GrenTech (GRRF) Enters Merger Agreement for $3.15/ADS
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China GrenTech Corporation Limited (Nasdaq: GRRF) has entered into an agreement and plan of merger with Talenthome Management Limited, a British Virgin Islands exempted company, and Xing Sheng Corporation Limited, a Cayman Islands exempted company wholly-owned by Parent. Parent is jointly owned indirectly by Mr. Yingjie Gao, the Company's Chairman and Chief Executive Officer, Ms. Rong Yu, the Company's Director and Chief Financial Officer, and Ms. Yin Huang. The Buyer Group collectively beneficially owns approximately 41.9% of the Company's issued and outstanding ordinary shares and intends to finance the merger and the other transactions contemplated by the Merger Agreement through proceeds from a loan facility in the amount of HK$320,000,000 from Guotai Junan Finance (Hong Kong) Limited.
Pursuant to the Merger Agreement, (i) upon the terms and subject to the conditions set forth therein, at the effective time of the merger, Merger Sub will be merged with and into the Company and the Company will become a wholly-owned subsidiary of Parent, and (ii) each ordinary share of the Company (including ordinary shares represented by American Depositary Shares ("ADSs"), each of which represents 25 ordinary shares) issued and outstanding immediately prior to the effective time of the merger will be cancelled in exchange for the right to receive US$0.126 (or US$3.15 per ADS) in cash without interest, except for the ordinary shares (including ordinary shares represented by ADSs) (x) beneficially owned by the Buyer Group, which will be cancelled without receiving any consideration, and (y) owned by holders of such ordinary shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 238 of the Cayman Islands Companies Law, as amended. This represents a 23.0% premium over the closing price as quoted by Bloomberg L.P. on November 11, 2011 and a 40.6% over the 60-trading day volume weighted average price as quoted by Bloomberg L.P. on November 11, 2011, the last trading day prior to the Company's announcement on November 14, 2011 that it had received a "going private" proposal.
The Company's Board of Directors, acting upon the unanimous recommendation of the Independent Committee formed by the Board of Directors, approved the Merger Agreement and the merger contemplated in the Merger Agreement and resolved to recommend that the Company's shareholders vote to approve and adopt the Merger Agreement and the merger. The Independent Committee, which is composed solely of directors unrelated to Parent, Merger Sub or any of the management members of the Company, negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.
The merger contemplated in the Merger Agreement, which is currently expected to close before the end of the second quarter of 2012, is subject to the approval by an affirmative vote of shareholders representing two-thirds or more of the ordinary shares present and voting in person or by proxy at a meeting of the Company's shareholders which will be convened to consider the approval and adoption of the Merger Agreement and the merger, as well as certain other customary closing conditions. The Buyer Group has agreed to vote to approve the Merger Agreement and the merger. If completed, the merger will result in the Company becoming a privately-held company and its ADSs would no longer be listed on the NASDAQ Global Select Market.
William Blair & Company, L.L.C. is serving as financial advisor to the Independent Committee. Cleary Gottlieb Steen & Hamilton LLP is serving as United States legal advisor to the Independent Committee and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Independent Committee. Ropes & Gray LLP is serving as United States legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as United States legal advisor to the Buyer Group. McDermott Will & Emery LLP is serving as United States legal advisor to William Blair & Company, L.L.C.
Pursuant to the Merger Agreement, (i) upon the terms and subject to the conditions set forth therein, at the effective time of the merger, Merger Sub will be merged with and into the Company and the Company will become a wholly-owned subsidiary of Parent, and (ii) each ordinary share of the Company (including ordinary shares represented by American Depositary Shares ("ADSs"), each of which represents 25 ordinary shares) issued and outstanding immediately prior to the effective time of the merger will be cancelled in exchange for the right to receive US$0.126 (or US$3.15 per ADS) in cash without interest, except for the ordinary shares (including ordinary shares represented by ADSs) (x) beneficially owned by the Buyer Group, which will be cancelled without receiving any consideration, and (y) owned by holders of such ordinary shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 238 of the Cayman Islands Companies Law, as amended. This represents a 23.0% premium over the closing price as quoted by Bloomberg L.P. on November 11, 2011 and a 40.6% over the 60-trading day volume weighted average price as quoted by Bloomberg L.P. on November 11, 2011, the last trading day prior to the Company's announcement on November 14, 2011 that it had received a "going private" proposal.
The Company's Board of Directors, acting upon the unanimous recommendation of the Independent Committee formed by the Board of Directors, approved the Merger Agreement and the merger contemplated in the Merger Agreement and resolved to recommend that the Company's shareholders vote to approve and adopt the Merger Agreement and the merger. The Independent Committee, which is composed solely of directors unrelated to Parent, Merger Sub or any of the management members of the Company, negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.
The merger contemplated in the Merger Agreement, which is currently expected to close before the end of the second quarter of 2012, is subject to the approval by an affirmative vote of shareholders representing two-thirds or more of the ordinary shares present and voting in person or by proxy at a meeting of the Company's shareholders which will be convened to consider the approval and adoption of the Merger Agreement and the merger, as well as certain other customary closing conditions. The Buyer Group has agreed to vote to approve the Merger Agreement and the merger. If completed, the merger will result in the Company becoming a privately-held company and its ADSs would no longer be listed on the NASDAQ Global Select Market.
William Blair & Company, L.L.C. is serving as financial advisor to the Independent Committee. Cleary Gottlieb Steen & Hamilton LLP is serving as United States legal advisor to the Independent Committee and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Independent Committee. Ropes & Gray LLP is serving as United States legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as United States legal advisor to the Buyer Group. McDermott Will & Emery LLP is serving as United States legal advisor to William Blair & Company, L.L.C.
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