Ascendent Capital Partners, a China-focused private equity firm, has made a $1.6 billion takeover bid for Hollysys Automation Technologies Ltd. after scooping up shares in the market to become its single largest shareholder.
The investment company has proposed a non-binding, all-cash offer of $26 per share to acquire all of the issued and outstanding shares of Beijing-based Hollysys, representing a 26% premium to the closing share price on Nov. 3, according to a letter to the board.
The Hong Kong-based PE firm has the ability to secure offshore funding, and coupled with its current 13.7% stake, the bid “presents the clearest and the most certain path to closing for all shareholders,” the letter said.
Founded in 1993, Hollysys provides integrated solutions for industrial automation and rail transport, according to its website. Operating in China and other regions in Asia, Hollysys has worked on more than 45,000 projects in sectors including power and petrochemicals as well as both high-speed and urban rail, the website shows.
Shares of Hollysys jumped as much as 7.8% in early trading in New York.
In August, a group of shareholders told Hollysys they’re planning to request an extraordinary general meeting to boost the size of the board and appoint new directors. Hollysys said Oct. 24 that it’s evaluating their request.
Key to Decision
Ascendent, which was among bidders pursuing Hollysys in 2021, said the recent shareholder action is an important consideration and is instrumental to its decision to submit the offer. The firm requested the EGM be held no later than Dec. 1.
Hollysys’s board would benefit from a greater number of independent directors, it added.
Hollysys has attracted and fended off several takeover bids since the end of 2020, and said in early 2022 that it had decided against a sale. Earlier, a consortium of Recco Control Technology Pte and Hong Kong-based Dazheng Group Investment Holdings Co. reaffirmed their initial approach with a $1.6 billion offer, prompting Hollysys to set up a special committee and to kick off a formal sale process.
On Oct. 24, Hollysys said its co-chief operating officers Lei Fang and Yue Xu made a competing non-binding proposal of $25 a share, setting up a potential bidding war.
Ascendent Capital was founded in 2011 by Leon Meng, a former managing director at D.E. Shaw & Co. and an ex-JPMorgan Chase & Co. investment banker. Meng also led blank-check company Silver Crest Acquisition Corp., which last year merged with the Chinese business of iconic Canadian coffee shop chain Tim Hortons, becoming a listed firm on the Nasdaq under the name TH International Ltd.