It is expected that if the Scheme becomes effective, all Scheme Shares will be cancelled and HSH will issue an aggregate of 2,448,280,617 new H shares to Scheme Shareholders and HEG will make a total cash payment of HK$2,984 million to Scheme Shareholders (assuming no change in the number of HEG Shares in issue prior to the Scheme Record Time). As of the Announcement Date, HSH and its wholly-owned subsidiary Haier Shareholdings (Hong Kong) have a total of 1,286,820,592 HEG Shares, representing approximately 45.68% of the outstanding issued share capital of HEG.
Platinum Securities, the independent valuer appointed by HSH, has estimated that the value of each HSH H Share as at July 30, 2020 is in the range of RMB16.45 to RMB16.90 (equivalent to approximately HK$18.23 to HK$18.72 respectively). On the basis of the mid-point of such valuation range of HK$18.47 and that Scheme Shareholders will received (i) 1.60 HSH H Shares and (ii) the Cash Payment for every Scheme Share cancelled, the theoretical total value of the HSH H Shares and the Cash Payment for each Scheme Share under the Privatisation Proposal will be approximately HK$31.51, representing a premium of approximately 42.65% to HEG's average closing price of HK$22.09 for the 30 trading days before the issue of the possible privatisation announcement on 16 December 2019, and a premium of approximately 28.34% to HEG's average closing price of HK$24.55 for the 30 trading days before the issue of the privatisation announcement on 31 July 2020.
If the Proposed Privatisation is successful, HSH will simultaneously achieve the privatisation of HEG and the listing of new H Shares of HSH on the Hong Kong Stock Exchange to become a A+D+H-shares listed company.
The Proposed Privatisation will constitute a material asset restructuring of HSH under the rules of the China Securities Regulatory Commission. Accordingly, the transaction is also subject to the approvals of the shareholders of HSH.
The Privatisation will enable the integration of HSH and HEG, facilitate the implementation of HSH's strategies, and enhance HSH's global leadership
After the proposed transaction is completed, HSH will continue to strive for a Smart Home Platform and enhance interconnection capabilities by consolidating various product categories under HSH and HEG as well as operations in R&D, manufacturing, distribution and other services, in a bid to develop smart home solutions business. At the same time, HEG will expand its product portfolio to cover refrigerators, freezers, air conditioners, kitchen appliances and small appliances that are currently operated by HSH, thus benefiting from full-suite smart home products and service solutions.
In addition, as the number of related party transactions in R&D and distribution will be largely reduced or eliminated, HSH will be able to further improve its operational efficiency, thereby enhancing its leading position in the one-stop smart home solution business on the consumer front. On the one hand, HSH has established a global business platform by means of organic growth and a series of successful overseas acquisitions. In view of this, HEG will be able to speed up the overseas expansion of its existing washing machine, water heater and water purifier businesses through the global platform of HSH; on the other hand, as the competition and related party transactions between the two companies lessen, HSH will be better positioned to streamline decision-making processes and expedite lead time, which will accelerate the implementation of its Experiential Cloud Strategy: firstly, the Experiential Cloud Strategy will offer users seamless experience through full-suite smart solutions; secondly, it is also an ever-evolving platform connecting and benefiting billions of families, users and businesses. HSH aspires to become the life-time partner of millions of users with its smart solutions in every stop of their journey of building a better home.
The Privatisation will generate returns for the Scheme Shareholders
At an exchange ratio of 1.60 HSH H Share and with the Cash Payment of HK$1.95 per Scheme Share, the theoretical value per Scheme Share under the Privatization Proposal of HK$31.51 represents a premium of approximately 28.34% to HEG's average closing price of HK$24.55 for the 30 trading days before the privatisation announcement on 31 July 2020.
The Scheme Shareholders will benefit from a stronger HEG as part of the enlarged HSH Group and potential synergies arising from further integration of HEG and HSH. Scheme Shareholders will also be able to partly monetize their investments in HEG through the Cash Payment. It is expected that HSH will accelerate its overseas expansion after the transaction and achieve robust growth with an enlarged product portfolio. In addition, through further resources integration and operating efficiency improvement, HSH is expected to optimize spending and generate sustained returns for its shareholders. It is expected that after the listing of HSH H Shares completes, HSH Group will benefit from a larger market capitalization and a more diversified investor base.
After the Scheme becomes effective, with improved capital management and operational efficiency, HSH plans to increase the dividend pay-out ratio to 40% within three years on the basis of net profit attributable to parent company's ordinary shareholders which means a significant improvement compared with the 30% pay-out ratio of recent years, in order to demonstrate its commitment to continuing enhancement of returns for all shareholders.
HSH has appointed CICC and J.P. Morgan to act as its joint financial advisers, Clifford Chance LLP and King & Wood Mallesons as legal advisers in connection with the Privatisation Proposal and the Scheme, and Sullivan & Cromwell (Hong Kong) LLP and Zhong Lun Law Firm are legal advisers to the joint financial advisers; HEG has appointed UBS as its financial adviser and Fangda Partners as legal adviser in connection with the Privatisation Proposal and the Scheme.
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記事名：「Haier Smart Home and Haier Electric Group jointly announced the proposed privatization of Haier Electric Group by way of an issuance of new H Shares to be listed on the Hong Kong Stock Exchange」