Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Beijing Jingneng Clean Energy / Event-Driven

<p><strong>80.22%</strong>. That's the only figure that matters.</p>
<p><a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a> joins <a href="https://www.smartkarma.com/entities/harbin-electric-co-ltd-h" target="_blank" data-smartkarma-citation="entities:11116:1" rel="noopener">Harbin Electric Co Ltd H (1133 HK)</a> as the second Merger by Absorption transaction to <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0301/2021030103095.pdf" target="_blank" rel="noopener">fail</a> on account of the tendering condition.</p>
<p>1,207,310,872 H Shares, or 80.22% of the total issued H Shares held by the Independent H Shareholders, tendered. </p>
<p><a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0520/ltn20190520874.pdf" target="_blank" rel="noopener">85.8%</a> of independent shares tendered into the Harbin Offer by the 60th day, and the Offer was subsequently, and unprecedently, extended (&amp; then failed). <a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener">Huaneng Renewables Corp H (958 HK)</a> received <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0120/2020012000919.pdf" target="_blank" rel="noopener">90.8%</a> on the 60th day - therefore the Offer was declared unconditional as to <em>acceptances - </em>but the Offer was still subject to approvals from NDRC and MOFCOM, and the registration of SAFE approval - and was also granted an extension by the SFC.</p>
<p>With less than 90% tendered AND with approvals/registration with Beijing SASAC, NDRC, and BAFE outstanding, the Offer for Jingneng was not extended.</p>
<p>Share tendered will be returned "<em>as soon as possible but in any event within ten days</em>".</p>
<p>More below the fold.</p>

80.22%. That's the only figure that matters.
Beijing Jingneng Clean Energy (579 HK) joins Harbin Electric Co Ltd H (1133 HK) as the second Merger by Absorption transaction to fail on account of the tendering condition.
1,207,310,872 H Shares, or 80.22% of the total issued H Shares held by the Independent H Shareholders, tendered. 
85.8% of independent shares tendered into the Harbin Offer by the 60th day, and the Offer was subsequently, and unprecedently, extended (&amp; then failed). Huaneng Renewables Corp H (958 HK) received 90.8% on the 60th day - therefore the Offer was declared unconditional as to acceptances - but the Offer was still subject to approvals from NDRC and MOFCOM, and the registration of SAFE approval - and was also granted an extension by the SFC.
With less than 90% tendered AND with approvals/registration with Beijing SASAC, NDRC, and BAFE outstanding, the Offer for Jingneng was not extended.
Share tendered will be returned "as soon as possible but in any event within ten days".
More below the fold.

Beijing Jingneng (579 HK): And That's a Fail

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<p>Subsequent to a low-turnout at the H-share class meeting last Friday (the 19th February), <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a>'s shares declined 6.7% on Monday, followed by 6.3% yesterday, and 3.1% today. All on above-average volume. </p>
<p>Jingneng is now trading at a 25% gross spread to the voluntary conditional offer price of HK$2.70/share. Quite remarkable given deal completion is binary, and there is little in the way of clarity to indicate deal failure is more certain.</p>
<p>Jingneng's undisturbed price back in early July 2020 when a possible Offer was first <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0706/2020070602025.pdf" target="_blank" rel="noopener">floated</a>, was HK$1.58. However, the power mix that Jingneng supplies has sector-by-sector average gains - some considerable - since the deal.</p>
<p>Jingneng has overshot to the downside, and is a buy outright or against a basket of peers.</p>
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<div>More below the fold.</div>
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Subsequent to a low-turnout at the H-share class meeting last Friday (the 19th February), Beijing Jingneng Clean Energy (579 HK)'s shares declined 6.7% on Monday, followed by 6.3% yesterday, and 3.1% today. All on above-average volume. 
Jingneng is now trading at a 25% gross spread to the voluntary conditional offer price of HK$2.70/share. Quite remarkable given deal completion is binary, and there is little in the way of clarity to indicate deal failure is more certain.
Jingneng's undisturbed price back in early July 2020 when a possible Offer was first floated, was HK$1.58. However, the power mix that Jingneng supplies has sector-by-sector average gains - some considerable - since the deal.
Jingneng has overshot to the downside, and is a buy outright or against a basket of peers.






More below the fold.






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<p>Back on the 17 November, <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1117/2020111701054.pdf" target="_blank" rel="noopener">announced</a> a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. </p>
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<p>As Jingneng is PRC-incorporated, which confers no rights to the Bidder/Owner to compulsorily acquire shares, or to residual shareholders to require a buyout, the two-step Offer comprises a Scheme-like vote (≥ 75% for, ≤10% against) and a 90% tendering condition.</p>
<p>The <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1231/2020123100105.pdf" target="_blank" rel="noopener">Composite Document</a> was despatched on the 31 December, and the EGM and H-share class meetings were held on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0219/2021021900730.pdf" target="_blank" rel="noopener">19 February</a>. All resolutions were passed. For the H-share class meeting, 97.9% of shares in attendance voted for the Offer.</p>
<p>The vote was not seen as a risk to the deal. Yet shares are off 4.3% as I type. The low turn-out at the meeting (38.21% of H-shareholders) is likely the cause of today's move. 61.79% of shareholders didn't bother to cast a vote - does that apathy to the Offer make it harder for the bankers to rustle up the necessary 90% to tender shares?</p>
<p>More below the fold.</p>
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Back on the 17 November, Beijing Jingneng Clean Energy (579 HK) announced a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. 


As Jingneng is PRC-incorporated, which confers no rights to the Bidder/Owner to compulsorily acquire shares, or to residual shareholders to require a buyout, the two-step Offer comprises a Scheme-like vote (≥ 75% for, ≤10% against) and a 90% tendering condition.
The Composite Document was despatched on the 31 December, and the EGM and H-share class meetings were held on the 19 February. All resolutions were passed. For the H-share class meeting, 97.9% of shares in attendance voted for the Offer.
The vote was not seen as a risk to the deal. Yet shares are off 4.3% as I type. The low turn-out at the meeting (38.21% of H-shareholders) is likely the cause of today's move. 61.79% of shareholders didn't bother to cast a vote - does that apathy to the Offer make it harder for the bankers to rustle up the necessary 90% to tender shares?
More below the fold.


Beijing Jingneng (579 HK): Low Voter Turn-Out Sees Spread Widening

<p>I've analysed 14 Merger by Absorption deals over the last 16 years. These unique privatisation Offers address the peculiarities of acquiring PRC-incorporated companies listed in Hong Kong.</p>
<p>There are no rights under the laws of the PRC and the Articles of Association of a PRC-incorporated company to compulsorily acquire its H Shares that are not tendered for acceptance pursuant to any H Share Offer.</p>
<p>The only mechanism available to <em>fully</em> privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). A tendering condition of 90% <em>may</em> also be present.</p>
<p>Of these 14 transactions, 10 have been successfully privatised, three remain ongoing, plus we have one ignominious failure for <a href="https://www.smartkarma.com/entities/harbin-electric-co-ltd-h" target="_blank" data-smartkarma-citation="entities:11116:1" rel="noopener">Harbin Electric Co Ltd H (1133 HK)</a>.</p>
<p>As always, more below the fold. </p>

I've analysed 14 Merger by Absorption deals over the last 16 years. These unique privatisation Offers address the peculiarities of acquiring PRC-incorporated companies listed in Hong Kong.
There are no rights under the laws of the PRC and the Articles of Association of a PRC-incorporated company to compulsorily acquire its H Shares that are not tendered for acceptance pursuant to any H Share Offer.
The only mechanism available to fully privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). A tendering condition of 90% may also be present.
Of these 14 transactions, 10 have been successfully privatised, three remain ongoing, plus we have one ignominious failure for Harbin Electric Co Ltd H (1133 HK).
As always, more below the fold. 

Quiddity M&A : A Guide To Mergers By Absorption

Zhejiang New Century Hotel Management Group / Event-Driven

Zhejiang New Century Hotel Management Group

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<p>After <a href="https://www.smartkarma.com/entities/zhejiang-new-century-hotel-management-group" target="_blank" data-smartkarma-citation="entities:27944:1" rel="noopener">Zhejiang New Century Hotel Management Group (1158 HK)</a>'s (ZNCH) shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0119/2021011900019.pdf" target="_blank" rel="noopener">suspended</a> ahead of trading on the 19 January "<em>pursuant to The Codes on Takeovers and Mergers which constitute inside information of the Company</em>", ZNCH has now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0120/2021012000655.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer from a vehicle co-owned by Sequoia China and Ocean Link.</p>
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<p>The Offer price is HK$18.15/share, a 23.9% premium to last close, and a 20.8% premium to the average closing price over the previous 30 trading days. The Offer price will not be increased. A concurrent Offer for ZNCH's domestic shares at RMB15.018066/share is also tabled.</p>
<p>ZNCH is incorporated in the PRC, and as such, there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.</p>
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<p>ZNCH has 280mn shares out, comprising 70,000,000 H shares (25% of shares out), 159,659,640 domestic shares (57% of shares out), and 50,340,360 unlisted foreign shares (18% of shares out). Sequoia China/Ocean Link currently hold no shares. </p>
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<p>CTrip, a pre-IPO investor, with 14.83mn H shares, has given an irrevocable <em>supporting</em> the Offer, but will NOT tender. On account of a special shareholder arrangement, CTrip is deemed to be an Offeror Concert Party and therefore does not form part of the Independent H Shareholders. </p>
<p>GreenTree, a pre-IPO investor, with 13.87mn H shares has given an irrevocable supporting the Offer and will also tender. GreenTree forms part of the Independent H Shareholders. </p>
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<p>The pre-conditions, which cannot be waived, include approvals from an anti-trust review under the Anti-Monopoly Law of the PRC, and SAMR.</p>
<p>This appears an <em>okay</em> deal. The Pre-Conditional Long Stop date is the 31 May 2021, but these approvals should be completed well before. Merger by Absorption transactions are typically wrapped up in around four months.</p>
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<p>As always, more below the fold.</p>
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After Zhejiang New Century Hotel Management Group (1158 HK)'s (ZNCH) shares were suspended ahead of trading on the 19 January "pursuant to The Codes on Takeovers and Mergers which constitute inside information of the Company", ZNCH has now announced a pre-conditional Offer from a vehicle co-owned by Sequoia China and Ocean Link.


The Offer price is HK$18.15/share, a 23.9% premium to last close, and a 20.8% premium to the average closing price over the previous 30 trading days. The Offer price will not be increased. A concurrent Offer for ZNCH's domestic shares at RMB15.018066/share is also tabled.
ZNCH is incorporated in the PRC, and as such, there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.


ZNCH has 280mn shares out, comprising 70,000,000 H shares (25% of shares out), 159,659,640 domestic shares (57% of shares out), and 50,340,360 unlisted foreign shares (18% of shares out). Sequoia China/Ocean Link currently hold no shares. 


CTrip, a pre-IPO investor, with 14.83mn H shares, has given an irrevocable supporting the Offer, but will NOT tender. On account of a special shareholder arrangement, CTrip is deemed to be an Offeror Concert Party and therefore does not form part of the Independent H Shareholders. 
GreenTree, a pre-IPO investor, with 13.87mn H shares has given an irrevocable supporting the Offer and will also tender. GreenTree forms part of the Independent H Shareholders. 


The pre-conditions, which cannot be waived, include approvals from an anti-trust review under the Anti-Monopoly Law of the PRC, and SAMR.
This appears an okay deal. The Pre-Conditional Long Stop date is the 31 May 2021, but these approvals should be completed well before. Merger by Absorption transactions are typically wrapped up in around four months.


As always, more below the fold.


Zhejiang New Century (1158 HK): Pre-Conditional Offer

China

Guodian Changyuan Electric Power Co., Ltd. generates electric power and thermal power through its hydroelectric and thermal power plants.

Guodian Changyuan Electric Power Co. (000966 CH)

Jilin Power Share Co., Ltd. operates thermal power plants through its subsidiaries. The electric power generated by the Company is supplied to Northeast China. The Company also supplies heat power and natural gas.

China Datang Corporation Renewable Power Company Ltd. generates electricity from renewable resources.  The Company operates wind farms and hydroelectric power plants.

China Datang Corp Renewable Power (1798 HK)

Guangdong Baolihua New Energy Stock Co.,Ltd. is an investment holding company. Through its subsidiaries, the Company undertakes heavy construction projects, invests in real estate development, develops computer software, generates and supplies electricity.

Guangdong Baolihua New Energy Stock A (000690 CH)

Huadian Energy Co., Ltd. generates electric power.  The electric power generated by the Company is supplied to the Heilongjiang Province.

Guangdong Electric Power Development Co.,Ltd offers power supply services. The Company provides power transmission, power system management, power network maintenance, and other services. Guangdong Electric Power Development also operates power project investment, power industry technical consultation, and other businesses.

Guangdong Electric Power Devel (000539 CH)

Jointo Energy Investment Co Ltd Hebei operates heat-engine plant and hotel business. Through its subsidiaries, the Company also operates department stores and develops real estate.

Jointo Energy Investment Co.,Ltd. Hebei (000600 CH)

Zhongmin Energy Co., Ltd. operates in the electricity generation industry. The Company produces and markets energy from wind and solar power stations throughout China.

CECEP Wind-power Corporation develops and constructs wind power projects. The Company provides wind power generation, transmission, and electricity distribution services. CECEP Wind-power conducts businesses domestically.

Jiangsu New Energy Development Co., Ltd. operates renewable energy development businesses. The Company generates wind energy, solar energy, biomass and geothermal energy, ocean energy, and other energy products. Jiangsu New Energy Development also operates industrial investments, investment management, and other businesses.

Jiangsu New Energy Development (603693 CH)

Ratch Group PCL operates as a power producer company. The Company focuses on investment fossil fuel power generation and renewable projects, as well as businesses adjacent to electricity generation and energy. Ratchaburi Group serves customers in Asia.

TransAlta Corporation is a non-regulated electric generation and marketing company with its growth focused in developing coal and gas-fired generation. The Company is currently focused on Australia, Canada, the United States, and Mexico.

ContourGlobal PLC operates as power generation company. The Company owns, manages, and generates electricity through wind, solar, and hydro power plants. ContourGlobal serves customers worldwide.

Jaiprakash Power Ventures Ltd. generates electricity.  The Company operates a private sector hydroelectric power plant.

Electricity Generating Public Company Limited is an electric utility holding company.  The Company, through its two major subsidiaries, produces and supplies electricity to the Electricity Generating Authority of Thailand (EGAT), under long term power purchase agreements of 20 and 15 years.  It also operates energy related businesses through joint ventures.

B.Grimm Power Public Company Limited operates as a renewable energy company. The Company focuses on the development, financing, construction, and operation of green field power plants. B.Grimm Power also renders electricity distribution, operations, and maintenance services. B.Grimm Power serves clients in Asia.

Boralex Inc. is an electricity producer whose core business is the development and  operation of renewable energy power stations. The Corporation operates assets  in the following power generation types - wind, hydroelectric, thermal and solar - based in Canada, the Northeastern United States and France

Innergex Renewable Energy, Inc. is an independent developer and operator of renewable power generating facilities. The Company focuses on hydroelectric and wind power projects.

TransAlta Renewables Inc. owns renewable power generation facilities. The Company invests in contracted, renewable power generation assets including wind and hydroelectric plants.

NextEra Energy Partners LP owns, operates and acquires contracted clean energy projects including wind and solar.

Beijing Jingneng Clean Energy Co, Ltd. provides clean energy in China.  The Company offers gas-fired power, heat energy, wind power, small to medium hydropower, and other clean energy projects.  Beijing Jingneng Clean Energy owns and operates various energy plants.

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Beijing Jingneng Clean Energy (579 HK)

Beijing Jingneng (579 HK): And That's a Fail

There will be selling pressure on the stock, in two phases - tomorrow, and when shares are returned. However, Jingneng is trading cheap. This is a...

David Blennerhassett

Beijing Jingneng (579 HK): This Is A Buy

If it does not go through, the downside should be limited. And current valuations are not demanding - 8.8x PER on an LTM basis. I would buy...

David Blennerhassett

Beijing Jingneng (579 HK): Low Voter Turn-Out Sees Spread Widening

Currently trading at a massive gross spread of 11%, the widest since the deal was announced. This is in effect, a binary deal. I still believe this...

David Blennerhassett

Quiddity M&A : A Guide To Mergers By Absorption

Beijing Jingneng's effective tender rate is the highest of all Merger by Absorptions. However, bankers have lifted the tendering rate efficiency in...

David Blennerhassett

Zhejiang New Century (1158 HK): Pre-Conditional Offer

Assuming payment late-May, I would expect ZNCH to trade around $17/share, or a 6-7% gross spread, and a ~22% annualised spread. Buy around $17...

David Blennerhassett

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