HONG KONG - A consortium led by Dazheng Group Acquisition Limited has reaffirmed its intention to acquire Hollysys Automation (NASDAQ:HOLI) Technologies Ltd. (NASDAQ: HOLI), offering shareholders a premium over the competing Ascendent Capital bid. The consortium's unwavering offer of $29.50 per share stands as an 11.3% premium to Ascendent's proposal, aiming to provide Hollysys shareholders with a more assured closing.
The consortium, which includes Dazheng Group and TFI Asset Management Limited, has secured financial commitments that surpass industry norms, with a $1.05 billion debt commitment from a prominent PRC-headquartered bank and $800 million in equity commitments. These commitments are backed by robust proof of funding, including bank statements and formally executed equity commitment letters, providing a closing certainty that the consortium claims is superior to that of Ascendent's offer.
Negotiations between Hollysys and the consortium began on January 28, 2024, as acknowledged by the Special Committee in a proxy statement supplement. The consortium argues that the Special Committee's recognition of their proposal implies its superiority or potential superiority over Ascendent's bid. However, the Special Committee has not recommended an adjournment of the Extraordinary General Meeting (EGM) scheduled for February 8, 2024, to consider the consortium's offer. As a result, the consortium is urging shareholders to vote AGAINST the Ascendent transaction to secure the possibility of exiting at $29.50 per share.
Leading Proxy Advisors, Institutional Shareholder Services (ISS) and Glass Lewis, have recommended that shareholders vote against the Ascendent transaction, citing concerns over the sales process and the Special Committee's actions. The consortium emphasizes that rejection of the Ascendent deal would not incur a termination fee for Hollysys and maintains that a vote against it is in the shareholders' best interest.
The consortium has also highlighted the importance of not voting for the Ascendent transaction to preserve dissenting and appraisal rights under Section 179 of the British Virgin Islands Business Companies Act. This reminder comes in light of the lack of information on these rights in Hollysys's proxy statement.
This news is based on a press release statement from Dazheng Group Acquisition Limited.
InvestingPro Insights
In light of the ongoing acquisition proposals for Hollysys Automation Technologies Ltd. (NASDAQ: HOLI), investors might find the following InvestingPro data and tips particularly insightful. The company's market capitalization stands at a robust $1.57 billion, underlining its significant presence in the industry. HOLI's Price/Earnings (P/E) ratio is currently at 13.34, suggesting that the stock is trading at a low earnings multiple relative to its near-term earnings growth - a point that could be pivotal for shareholders evaluating the takeover bids. Moreover, the company has experienced an 11.48% revenue growth over the last twelve months as of Q1 2024, indicating a healthy upward trend in its financial performance.
InvestingPro Tips also reveal that HOLI holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations, providing a degree of financial stability and flexibility. Additionally, the stock has been trading near its 52-week high and has seen a strong return over the last three months, with a 22.62% price total return, which could be an attractive factor for investors considering the current offers.
For those interested in a deeper analysis, InvestingPro offers a range of additional tips, including insights into the company's low price volatility, its ability to cover interest payments with cash flows, and predictions of profitability for this year. Subscribers to InvestingPro can access these tips and more, with the service currently available on a special New Year sale at up to 50% off. Use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription, and enrich your investment strategy with valuable insights.
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