Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hon - PDF document

1 Hong Kong Exchanges and Clearing Limited
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility acquire, purchase or subscribe for securities of China ZhongDi Dairy Holdings Company Limited nor is it a solicitation CHINA ZHONGDI DAIRY HOLDINGS COMPANY LIMITED(incorporated in the Cayman Islands with limited liability)(Stock Code: 1492)JOINT ANNOUNCEMENT(1) THE SHARE SUBSCRIPTION AGREEMENT;AND(2) POSSIBLE MANDATORY CONDITIONAL CASH OFFER BY CLSA LIMITED FOR AND ON BEHALF OF WHOLESOME HARVEST LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF CHINA ZHONGDI DAIRY HOLDINGS COMPANY LIMITED (OTHER THAN THOSE ALREADY OWNED AND/OR AGREED TO BE ACQUIRED BY WHOLESOME HARVEST LIMITED)Exclusive financial adviser to Wholesome Harvest Li

2 mited 2 total issued share capital of th
mited 2 total issued share capital of the Company as at the date of this joint announcement) calculated by the Offeror, and Zhang Group has conditionally agreed to transfer 707,878,000 Shares Upon Completion, the Offeror will hold 1,140,519,522 Shares, representing approximately 43.75% of voting rights of the Company calculated based on the issued share capital of the Company as at the date of this joint announcement. Jingang Trade and YeGu Investment will respectively hold 1,898,841,522 and 707,878,000 shares of the Offeror, representing shareholder of the Offeror, being Jingang Trade, is holding 432,641,522 Shares, representing Completion, 432,641,522 Shares, 392,088,000 Shares and 315,790,000 Shares, representing respectively

3 , where the Offeror will be interested i
, where the Offeror will be interested in 1,140,519,522 Shares in aggregate, 3 Upon Completion, CLSA Limited, on behalf of the Offeror and in compliance with the HK$1.132 in cashof which are set out in the section headed Comparison of value below) and commercial lien and together with all rights attaching to them, including all rights to any dividend or other The Offeror will not increase the Offer Price for the Offer Shares as set out above. Principal terms of the Offer are set out in the section headed Possible Mandatory Conditional As at the date of this joint announcement, there are 2,606,719,522 Shares in issue. On the basis of the Offer Price being HK$1.132 per Offer Share, the total issued share capital of the Company Ex

4 cluding the Exchange Shares and assuming
cluding the Exchange Shares and assuming no change in the issued share capital of the Offeror under the Offer will be HK$1,659,738,400. CLSA Capital Markets, the exclusive 4 The Share Subscription is an arrangement between Jingang Trades (being the beneficial owner of the Offeror as at the date of this joint announcement and a Shareholder) and Zhang Group (being As such, the Share Subscription constitutes a special deal under Note 3 to Rule 25 of the Takeovers Code. Accordingly, the Share Subscription will be conditional upon, among others, reasonable, and (ii) it is approved by the Independent Shareholders at the EGM by way of poll. the Cayman Islands Companies Law (as amended) to compulsorily acquire those Shares not completi

5 on of such compulsory acquisition, if ex
on of such compulsory acquisition, if exercised, the Company will become a wholly-compulsory acquisition rights, such rights may only be exercised if, in addition to satisfying any non-executive Directors, namely Mr. Liu Dai, Mr. Du Yuchen, Mr. Li Jian and Ms. Yu Tianhua Zhang Juying Jerry, who have no direct or indirect interest in the Offer, has been established to 5 Board Committee, to advise the Independent Board Committee in respect of the Share Financial Adviser and the recommendation of the Independent Board Committee will be included which constitutes a special deal; (ii) the recommendation from the Independent Board Pursuant to Rule 8.2 of the Takeovers Code, the Offeror is required to despatch an offer document contai

6 ning the terms of the Offer, together wi
ning the terms of the Offer, together with the Form of Acceptance, to the Takeovers Code to extend the deadline for the despatch of the Composite Document to within If the Offer materializes, it is the intention of the Offeror and the Company to combine the to the Shareholders in accordance with the Takeovers Code. The relevant holders of Offer Independent Financial Adviser to the Independent Board Committee and the recommendation from the Independent Board Committee as to whether the terms of the Offer are fair and 6 conditional on the fulfillment of the conditions precedent of the Share Subscription and potential investors should exercise caution when dealing in the securities of the the Share Subscription Agreement on 27 Sep

7 tember 2020. The principal terms of the
tember 2020. The principal terms of the Share issued by the Offeror. Zhang Group has conditionally agreed to transfer 707,878,000 Shares (i) the passing of all necessary resolutions by the independent Shareholders (as required under under the Takeovers Code and/or the Listing Rules to effect the Share Subscription (ii) the Executive granting special deal consent under Rule 25 of the Takeovers Code in (iii) the receipt of antitrust clearance from the State Administration for Market Regulation of the (iv) Jingang Trades warranties in the Share Subscription Agreement shall be true and correct in (v) Zhang Group(i) Jingang Trade is the sole legal and beneficial owner of 432,641,522 Shares;(ii) there is no option, right to acquire,

8 mortgage, charge, pledge, lien or other
mortgage, charge, pledge, lien or other form of security or and there is no agreement or commitment to give or create any and no claim has been made (iii) Jingang Trade has the requisite power and authority to enter into and perform the Share (iv) the Share Subscription Agreement constitutes binding obligations of Jingang Trade in (i) Zhang Group are the beneficial owners of 707,878,000 Shares;(ii) there is no option, right to acquire, mortgage, charge, pledge, lien or other form of security (iii) Zhang Group have the requisite power and authority to enter into and perform the Share (iv) the Share Subscription Agreement constitutes binding obligations of Zhang Group in Pursuant to the Share Subscription Agreement, Completion sh

9 all take place within ten (10) Completio
all take place within ten (10) Completion, the Offeror will hold 1,140,519,522 Shares, representing approximately 43.75% of voting rights of the Company calculated based on the issued share capital of the Company as at 1,898,841,522 and 707,878,000 shares of the Offeror, representing approximately 72.84% and shareholder of the Offeror, being Jingang Trade, is holding 432,641,522 Shares, representing Completion, 432,641,522 Shares, 392,088,000 Shares and 315,790,000 Shares, representing approximately 16.6%, 15.04% and 12.11% of the total issued share capital of the Company, respectively, where the Offeror will be interested in 1,140,519,522 Shares in aggregate, Company does not have any outstanding options, derivatives, warrants

10 or securities which are Code, will make
or securities which are Code, will make the Offer to acquire all the Offer Shares on the terms to be set out in the under the Share Subscription Agreement, which was determined by the Offeror after taking into The Offeror will not increase the Offer Price for the Offer Shares as set out above. Shareholders and potential investors should be aware that, following the making of this (i) a premium of approximately 11.0% over the closing price of HK$1.020 per Share as quoted (ii) a premium of approximately 16.9% over the average closing price of approximately (iii) a premium of approximately 20.0% over the average closing price of approximately (iv) a premium of approximately 22.8% over the average closing price of approximately (v

11 ) a premium of approximately 44.9% over
) a premium of approximately 44.9% over the average closing price of approximately (vi) a premium of approximately 77.6% over the average closing price of approximately (vii) a premium of approximately 19.8% over the audited consolidated net asset value attributable to the owners of the Company of approximately RMB0.85 (equivalent to approximately HK$0.94 at the exchange rate of HK$1.11635 to RMB1, being the exchange rate as quoted by 2019, calculated by dividing the Groups audited consolidated net assets attributable to the Shareholders of approximately RMB2,206,298,000 as at 31 December 2019 by 2,606,719,522 (viii) a premium of approximately 16.6% over the unaudited consolidated net asset value attributable to the owners of th

12 e Company of approximately RMB0.89 (equi
e Company of approximately RMB0.89 (equivalent to at 30 June 2020, calculated by dividing the Groups unaudited consolidated net assets Excluding the Exchange Shares and assuming no change in the issued share capital of the Company from the date of this joint announcement up to the close of the Offer, 1,466,200,000 Shares will be to the Offeror, is satisfied that sufficient financial resources are available to the Offeror to satisfy the Listing Rules. The latest time on which the Offeror can declare the Offer unconditional as to caution when dealing in securities of the Company and if they are in any doubt about their Shares to be sold by such person under the Offer are fully paid and free and clear of all lien Acceptances of t

13 he Offer will be irrevocable and not cap
he Offer will be irrevocable and not capable of being withdrawn, except as Subject to the Offer having become, or having been declared, unconditional in all respects, respective ultimate beneficial owners, directors, officers, agents, advisers or associates or any other The Offeror intends to make the Offer available to all relevant holders of Offer Shares who are not resident in Hong Kong. The availability of the Offer to any Overseas Shareholders may compliance with other necessary formalities and the payment of any transfer or other taxes due by requirements in such overseas jurisdictions that would be unduly burdensome, the Composite Document, subject to the Executives consent, will not be despatched to such Overseas Accept

14 ance of the Offer by any Overseas Shareh
ance of the Offer by any Overseas Shareholder will be deemed to constitute a representation and warranty from such Overseas Shareholder to the Offeror that the local the Offeror as at the date of this joint announcement and a Shareholder) and Zhang Group (being the direct and indirect Shareholders), which is not capable of being extended to all Shareholders. As such, the Share Subscription constitutes a special deal under Note 3 to Rule 25 of the Takeovers Code. Accordingly, the Share Subscription will be conditional upon, among others, reasonable, and (ii) it is approved by the Independent Shareholders at the EGM by way of poll. An Rule 25 of the Takeovers Code. For information relating to the circular to be despatched in relat

15 ion The Offeror is an exempted company
ion The Offeror is an exempted company incorporated in Cayman Islands and set up for the after the Completion, the Offeror will hold 1,140,519,522 Shares, representing approximately representing approximately 72.84% and 27.16% of the total issued share capital of the Offeror, Jingang Trade is a company incorporated in Hong Kong, primarily engaged in investment and are listed on the Shanghai Stock Exchange of the PRC (stock code: 600887). Yili Industrial is principally engaged in the business of processing and manufacturing dairy products in the PRC. (i) save for 1,201,979,522 Shares (representing approximately 46.11% of the existing issued (ii) save for the proposed transfer of 1,140,519,522 Shares by the Subscribers to the Off

16 eror convertible into Shares during the
eror convertible into Shares during the six-month period preceding the commencement of the offer (iii) save for the Share Subscription Agreement, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers (iv) save for the Share Subscription Agreement, there is no agreement or arrangement to which (v) none of the members of the Offeror Concert Group has borrowed or lent any relevant (vi) none of the members of the Offeror Concert Group has received any irrevocable commitment (vii) there is no outstanding derivative in respect of the securities of the Company entered into by (viii) save for the consideration for the Exchange Shares under the Share Subs

17 cription Agreement, there is no other co
cription Agreement, there is no other consideration, compensation or benefits in whatever form paid or to be (ix) save for the Share Subscription Agreement, there is no understanding, arrangement or special party acting in concert with any of them on one hand, and any member of the Offeror Concert (x) save for the Share Subscription Agreement, there is no understanding, arrangement or 16INFORMATION ON THE GROUPThe Company was incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in business operations including raising and breeding dairy cows, producing and selling premium raw milk, importing and selling dairy cows of q

18 uality breeds and breeding stock, and im
uality breeds and breeding stock, and import trading business Set out below is a summary of the audited financial information of the Group for each of the two financial years ended 31 December 2018 and 2019 as extracted from the annual report of the Company for the year ended 31 December 2019 and the unaudited financial information of the Group for the six months ended 30 June 2020 as extracted from the interim report of the Company For the year ended 31 DecemberFor the six months ended 30 June 201920182020RMB’000RMB’000RMB’000(audited)(audited)(unaudited)Revenue1,499,3811,424,986873,220Profit before tax102,37363,190103,552Profit and total comprehensive income for the period102,37363,190103,552As at 31 DecemberAs

19 at 30 June 201920182020RMB’000RMB&#
at 30 June 201920182020RMB’000RMB’000RMB’000(audited)(audited)(unaudited)Total assets5,323,5104,833,3045,438,599Total liabilities3,059,1742,731,3413,070,711Net assets2,264,3362,101,9632,367,888 Shares form the Exchange Shares: – Jingang Trade (other than through the Offeror) – YeGu Investment (other than through Green Farmlands) – Green Farmlands Shares form part of the Offer Shares and do not form part of the disinterested Shares: – SiYuan Investment the Offeror Concert Group1. As at the date of this joint announcement, Mr. Zhang Jianshe is the sole shareholder of YeGu Investment which directly holds 392,088,000 Shares and indirectly holds, through its shareholding in Green Farmlands, 2.

20 Mr. Zhang Jianshe and Mr. Zhang Kaizhan
Mr. Zhang Jianshe and Mr. Zhang Kaizhan are parties acting in concert pursuant to section 317 of the SFO. As 3. The table assumes there will be no change in the issued share capital of the Company from the date of this joint 4. Shareholding percentages may not add up to 100% due to rounding. the right to make any changes that it deems necessary or appropriate to the Groups business and by the Offeror under the Offer on the condition that the Offeror, within four (4) months of the Offeror seeks to acquire or privatize the Company by means of the Offer and the use of compulsory imposed by the Cayman Islands Companies Law (as amended), acceptance of the Offer and a false market exists or may exist in the trading of the Shares or t

21 here are insufficient Shares in minimum
here are insufficient Shares in minimum percentage of the Shares in public hands. In such circumstances, the Offeror will take non-executive Directors, namely Mr. Liu Dai, Mr. Du Yuchen, Mr. Li Jian and Ms. Yu Tianhua Zhang Juying Jerry, who have no direct or indirect interest in the Offer, has been established to Financial Adviser has been appointed. The advice of the Independent Financial Adviser and Share Subscription; (iii) the advice of the Independent Financial Adviser on the Share Subscription; containing the terms of the Offer, together with the Form of Acceptance, to the Shareholders within As there is a pre-condition (i.e., Completion) to the making of the Offer, the Offeror will apply to If the Offer materializes, it

22 is the intention of the Offeror and the
is the intention of the Offeror and the Company to combine the Board Committee in relation to the Offer; and (iii) a letter of advice from the Independent The relevant holders of Offer Shares are encouraged to read the Composite Document carefully, including the advice of the Independent Financial Adviser to the Independent Board Committee and the recommendation from the Independent Board Committee in the resolution(s) in respect of the Share Subscription (which constitutes the special deal) by way of As at the date of this joint announcement, the Offeror Concert Group holds an aggregate of 1,201,979,522 Shares, representing approximately 46.11% of the issued share capital of the The full text of Note 11 to Rule 22 of the Take

23 overs Code is reproduced below pursuant
overs Code is reproduced below pursuant to Rule 3.8 This dispensation does not alter the obligation of principals, associates and other persons The making of the Offer is subject to the occurrence of Completion, which in turn is conditional on the fulfillment of the conditions precedent of the Share Subscription Agreement or waiver thereof as appropriate. Accordingly, the Share Subscription may or the Peoples Republic of China which, for the purpose of this joint announcement, shall exclude Hong Kong, the Macau Special regulated activities under the SFO, the exclusive financial adviser to the and the shares of which are listed on the Main Board of the Stock the composite offer and response document to be jointly issued by the

24 Offeror and the Company in accordance wi
Offeror and the Company in accordance with the Takeovers Code containing, among other things, details of the Offer, the recommendation from the Independent Board Committee and the advice from the Independent Financial Adviser to the Independent Board the aggregate of 1,140,519,522 Shares to be transferred by Jingang Trade, YeGu Investment and Green Farmlands in exchange for 1,140,519,522 shares (being the total issued share capital) of the for the purpose of providing recommendations in respect of (i) the as to whether the terms of the Offer are fair and reasonable and as to advising the Independent Board Committee in respect of the Share any and all the Shares (other than those already owned and/or agreed to Wholesome Harvest

25 Limited, an exempted company incorporate
Limited, an exempted company incorporated in Cayman Islands with limited liability and wholly and beneficially owned by Jingang Trade as at the date of this joint announcement and will become a joint venture owned by Jingang Trade as to the Offeror, Jingang Trade, Mr. Zhang Jianshe, YeGu Investment, Green Farmlands, Mr. Zhang Kaizhan, SiYuan Investment and respective parties acting in concert with each of them or party as Shareholder(s) whose addresses, as shown on the register of members the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong ordinary share(s) of US$0.00001 each in the share capital of the the subscription of 2,606,719,522 shares of the Offeror by the the subscribers under the Share Subscription

26 Agreement, namely Jingang Trade, Mr. Zha
Agreement, namely Jingang Trade, Mr. Zhang Jianshe, YeGu Investment and Green non-executive Directors; and Prof. Li Shengli, Dr. Zhang Shengli and Mr. Zhang Juying Jerry as any of their associates or parties acting in concert with it), and confirm, having made all reasonable Mr. Wang Xiaogang accepts full responsibility for the accuracy of information contained in As at the date of this joint announcement, the sole director of YeGu Investment and Green joint announcement (other than those relating to the Group, the Offeror and Jingang Trade) of their knowledge, opinions expressed in this joint announcement (other than those expressed by consideration and there are no other facts not contained in this joint announcement, the omi