China Hainan Rubber, a state-owned holding company in China listed on the Shanghai Stock Exchange, has made a cash offer to acquire 574.2 million shares in the capital of Mainboard-listed Halcyon Agri Corporation.
The number of shares represents 36% of the total issued and paid-up share capital of Halcyon Agri.
The shares were purchased via a conditional share purchase agreement (SPA) entered into by China Hainan Rubber with Sinochem International (Overseas) Pte. Ltd.
The shares will be purchased for an aggregate cash consideration of US$180.9 million ($247.8 million), which comes up to around 31.5 US cents or 44 cents per share.
Under the SPA, Hainan Rubber shall be entitled to assign its rights and delegate its obligations under the SPA to the its nominee or a wholly-owned subsidiary to be incorporated (SPV).
On the basis that Hainan Rubber exercises such right of assignment and delegation, the SPV shall be the buyer of the share shares and the entity undertaking the Halcyon Agri offer. The SPV has not been incorporated as at Nov 16.
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The offer price represents a premium of about 50.3% over the last transacted price per Halcyon Agri share of 29 cents on Nov 11. Nov 11 is the last full day where shares in the company were trading prior to the trading halt called on the morning of Nov 14.
The offer price also represents a premium of 73.3% over the volume-weighted average price (VWAP) of the shares in Halcyon-Agri for the one-month period up to and including the last full trading day.
As the share acquisition will see China Hainan Rubber holding more than 30% of the shares in Halcyon Agri, it will subsequently make a mandatory conditional cash offer for all the remaining shares it does not own in the latter.
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The mandatory conditional cash offer will not be made till the pre-conditions and closing of the SPA is completed.
According to Halcyon Agri’s statement, both rubber businesses are “complementary and synergistic”, with China Hainan Rubber viewing the share acquisition and mandatory general offer as an opportunity to integrate both companies’ resources.
This is to “improve overall operating efficiency, move up the technology and value chain, and to benefit from economies of scale”, according to Halcyon Agri.
Following the acquisition, China Hainan Rubber says it does not intend to introduce any major changes to the existing business or management of Halcyon Agri. It also does not intend to discontinue the employment of the employees of Halcyon Agri or re-deploy any of the fixed assets of Halcyon Agri, other than in the ordinary course of business.
Shares in Halcyon Agri last traded at 29 cents before its trading halt on the morning of Nov 14.
