Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hollysys Automation Technologies / Event-Driven

<ul>
<li>Despite <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US)</a> receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. </li>
<li>But Hollysys' board stonewalled the SGM, pinning its reason - and a proposed injunction - on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. </li>
<li>That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.</li>
</ul>


Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. 
But Hollysys' board stonewalled the SGM, pinning its reason - and a proposed injunction - on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. 
That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.


<ul>
<li>On the 8th February 2024, 85% of <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US</a><a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">)</a> shareholders present and via proxy, <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=318042742&amp;type=PDF&amp;symbol=HOLI&amp;cdn=6d522b9b90b026dc73ccdc7b55e77ef2&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2024-02-08" target="_blank" rel="noopener">voted</a> for Ascendent Capital's Offer. After three-plus years, the end was finally in sight.</li>
<li>Then crickets. The merger was to complete in the 1Q. On the 15th April, HOLI released an accountant resignation notice. No word on dissenters or regulatory approvals. Shares sold off. </li>
<li>
The accountant resignation is a nothing burger. HOLI should lift their game and provide more transparency on the outstanding merger conditions. Still, the spread is attractive. This is a buy. </li>
</ul>


On the 8th February 2024, 85% of Hollysys Automation (HOLI US) shareholders present and via proxy, voted for Ascendent Capital's Offer. After three-plus years, the end was finally in sight.
Then crickets. The merger was to complete in the 1Q. On the 15th April, HOLI released an accountant resignation notice. No word on dissenters or regulatory approvals. Shares sold off. 

The accountant resignation is a nothing burger. HOLI should lift their game and provide more transparency on the outstanding merger conditions. Still, the spread is attractive. This is a buy. 


<ul>
<li>Back on the 26th January, proxy advisor Glass Lewis issued a report recommending <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US)</a> shareholders vote against Ascendent's merger. Two days later, ISS shared a similar view.</li>
<li>Both proxy advisors should read HOLI's latest proxy statements. Negotiating with Dazheng is like something out of the wild west. The Special Committee gave the consortium considerable latitude. </li>
<li>Passive investors will follow GL/ISS, which could jeopardize the vote on the 8th Feb. It should not come to this. </li>
</ul>


Back on the 26th January, proxy advisor Glass Lewis issued a report recommending Hollysys Automation (HOLI US) shareholders vote against Ascendent's merger. Two days later, ISS shared a similar view.
Both proxy advisors should read HOLI's latest proxy statements. Negotiating with Dazheng is like something out of the wild west. The Special Committee gave the consortium considerable latitude. 
Passive investors will follow GL/ISS, which could jeopardize the vote on the 8th Feb. It should not come to this. 


Hollysys (HOLI US): ISS/Glass Lewis Should Reverse Their Position

<ul>
<li>On the 26th January, proxy advisor Glass Lewis issued a report recommending <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys (HOLI US)</a> shareholders vote against Ascendent's merger. Two days later, ISS issued a similar opinion.  </li>
<li>Both reports targeted HOLI's efforts to maximize an Offer price. Elsewhere, some salient points were raised. But overall, there exists an air of naivety in their conclusions.</li>
<li>HOLI's EGM is scheduled for February 8th. The merger consideration of US$26.50/share is in line with, or above, the estimated values of Deutsche Bank's fairness opinion.</li>
</ul>


On the 26th January, proxy advisor Glass Lewis issued a report recommending Hollysys (HOLI US) shareholders vote against Ascendent's merger. Two days later, ISS issued a similar opinion.  
Both reports targeted HOLI's efforts to maximize an Offer price. Elsewhere, some salient points were raised. But overall, there exists an air of naivety in their conclusions.
HOLI's EGM is scheduled for February 8th. The merger consideration of US$26.50/share is in line with, or above, the estimated values of Deutsche Bank's fairness opinion.


Hollysys (HOLI US): Critiquing ISS & Glass Lewis' Critiques

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a> has <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=317971425&amp;type=PDF&amp;symbol=HOLI&amp;cdn=0e2d131620eff2ab7ed1d90ed671859e&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2024-01-05" target="_blank" rel="noopener">announced</a> that an EGM is scheduled for February 8th to vote on the merger agreement with Ascendent Capital Partners. </li>
<li>The Offer price remains at US$26.50/ADS. The shareholder approval required is simple majority. Regulatory approvals include NDRC, MoC and SAFE. Maybe a national security review.</li>
<li>And the Dazheng consortium? Apparently insufficient information as to its financing sources and consortium structure ruled it out. Separately, the SGM to spill the board has now been called off. </li>
</ul>



Hollysys Automation Technologies (HOLI US) has announced that an EGM is scheduled for February 8th to vote on the merger agreement with Ascendent Capital Partners. 
The Offer price remains at US$26.50/ADS. The shareholder approval required is simple majority. Regulatory approvals include NDRC, MoC and SAFE. Maybe a national security review.
And the Dazheng consortium? Apparently insufficient information as to its financing sources and consortium structure ruled it out. Separately, the SGM to spill the board has now been called off. 


Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test

China

Zhejiang Longsheng Group Co., Ltd. manufactures a variety of dyes including high intensity and rapid-dying Lonsperse Dye. The Company sells its products domestically and exports worldwide.

Zhejiang Longsheng Group Co., (600352 CH)

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Zhejiang Longsheng Group Co., (600352 CH)

2024 High Conviction: Buy Hollysys

That injunction was dismissed last week. An SGM will now be held late Janaury. A firm merger proposal is expected in the middle of next month. This...

David Blennerhassett

Hollysys (HOLI US): This Is A Buy

Trading wide at a gross spread of 7.4% to the US$26.50 Offer terms. Take advantage of investor fatigue, and buy HOLI here.

David Blennerhassett

Hollysys (HOLI US): ISS/Glass Lewis Should Reverse Their Position

I've been asked whether dissenting shareholders can vote at an EGM at these US-listed China play mergers. The answer is yes, as the rights that...

David Blennerhassett

Hollysys (HOLI US): Critiquing ISS & Glass Lewis' Critiques

HOLI is cheap, not only at US$26.50, but also US$29/share. That's all known. I'd take a firm Offer at US$26.50. So would fatigued shareholders.

David Blennerhassett

Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test

Some thoughts after Norges announced a 7.49% stake on the 12 Jan. Norges disclosed its position with a 13G filing, which typically means the...

David Blennerhassett

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