Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101776.pdf" target="_blank" rel="noopener">31 July 2020</a>, dairy farmer <a href="https://www.smartkarma.com/entities/china-zhongdi-dairy-holdings" target="_blank" data-smartkarma-citation="entities:22662:1" rel="noopener">China Zhongdi Dairy (1492 HK)</a> entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>,  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200704.pdf" target="_blank" rel="noopener">completed</a> on 12 August.</p>
<p>Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. </p>
<h3>The New News</h3>
<p>Jingang Trade and the Zhang Group have now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0927/2020092700065.pdf" target="_blank" rel="noopener">entered</a> into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.</p>
<p>The SSA is primarily subject to independent shareholder approval and China's SAMR.</p>
<p>The MGO is subject to a 50% (of all shares out) acceptance condition.</p>
<p>Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.</p>
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<p>This transaction is highly reminiscent of the recent <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0906/2020090600009.pdf" target="_blank" rel="noopener">conditional voluntary general offer</a> for <a href="https://www.smartkarma.com/entities/yuanshengtai-dairy-farm-ltd" target="_blank" data-smartkarma-citation="entities:17091:1" rel="noopener">Yuanshengtai Dairy Farm (1431 HK)</a> from <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a> discussed in <em><a href="https://skr.ma/uF9jE" target="_blank" rel="noopener">YST Dairy (1431 HK): VGO From China Feihe</a></em>. </p>
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<p>As always, more below the fold.</p>
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On 31 July 2020, dairy farmer China Zhongdi Dairy (1492 HK) entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by Inner Mongolia Yili Industrial Group (A) (600887 CH),  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was completed on 12 August.
Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. 
The New News
Jingang Trade and the Zhang Group have now entered into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.
The SSA is primarily subject to independent shareholder approval and China's SAMR.
The MGO is subject to a 50% (of all shares out) acceptance condition.
Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.


This transaction is highly reminiscent of the recent conditional voluntary general offer for Yuanshengtai Dairy Farm (1431 HK) from China Feihe (6186 HK) discussed in YST Dairy (1431 HK): VGO From China Feihe. 


As always, more below the fold.


Zhongdi Dairy (1492 HK): Possible MGO from Yili

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Yashili International Holdings / Event-Driven

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<li>
<a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> announced its controlling shareholder, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, is in discussions regarding its holdings in Yashili and several potential transactions.</li>
<li>If the transactions proceed, the potential privatisation offer is HK$1.20 per Yashili share, a 31.9% premium to the last close price of HK$0.91 (prior to the trading halt).</li>
<li>The potential transactions are subject to a number of pre-conditions and conditions. We think the potential offer is attractive.  </li>
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Yashili International Holdings (1230 HK) announced its controlling shareholder, China Mengniu Dairy Co (2319 HK), is in discussions regarding its holdings in Yashili and several potential transactions.
If the transactions proceed, the potential privatisation offer is HK$1.20 per Yashili share, a 31.9% premium to the last close price of HK$0.91 (prior to the trading halt).
The potential transactions are subject to a number of pre-conditions and conditions. We think the potential offer is attractive.  


Yashili’s Potential Pre-Conditional Privatisation Offer from Mengniu

Hong Kong

China ZhongDi Dairy Holdings Co., Limited is a dairy farming company. The Company raises and breeds dairy cows, produces and sells raw milk, and imports and sells dairy cows.

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China Zhongdi Dairy (1492 HK)

Zhongdi Dairy (1492 HK): Possible MGO from Yili

After entering into a trading halt on the 4 September "pursuant to The Codes on Takeovers and Mergers and Share Buy-backs", Yuanshengtai Dairy...

David Blennerhassett

Yashili’s Potential Pre-Conditional Privatisation Offer from Mengniu

Yashili announced that Mengniu is in discussions regarding its holdings in Yashili and several potential transactions, which could lead to a...

Arun George

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