CHINA: Zhongpin CEO takes meat firm private
By Dean Best | 26 November 2012
Chinese meat firm Zhongpin is set to be taken private by its chairman and chief executive.
Nasdaq-listed Zhongpin announced today (26 November) chairman and CEO Xianfu Zhu had agreed to pay US$13.50 a share for the company.
Zhongpin said the offer represented a premium of around 47% on the price the company's shares closed at on 26 March, the day before the CEO tabled his plan.
Two weeks after Zhongpin announced Zhu's proposal, the US Securities and Exchange Commission froze the assets of six Chinese citizens and one company charged with insider trading in the shares in Zhongpin.
The company sells pork products and fresh produce. Earlier this month, Zhongpin reported a fall in profits for the nine months to September despite higher sales. Zhongpin reported higher labour costs as it expanded, plus an increase in promotions.
Zhongpin Inc. Enters Into Merger Agreement For "Going Private" Transaction
BEIJING and CHANGGE, China, Nov. 26, 2012 /PRNewswire/ -- Zhongpin Inc. (Nasdaq: HOGS) ("Zhongpin", the "Company", "we", "us" and "our"), a leading meat and food processing company in the People's Republic of China, today announced that it has entered into a definitive agreement and plan of merger (the "Merger Agreement") with Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr. Xianfu Zhu, the Company's Chairman and Chief Executive Officer.
Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of the Company common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr.Shuichi Si and Ms. Juanjuan Wang (collectively, the "Rollover Holders"), who are party to an equity contribution agreement with Parent and Holdco pursuant to which they have agreed to contribute their shares of Company common stock to Parent immediately prior to the effective time of the merger, (iii) the Company or any direct or indirect wholly-owned subsidiary of the Company or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law) will be converted automatically into the right to receive $13.50 in cash (the "Per Share Merger Consideration"), without interest. Collectively, the Rollover Holders own approximately 26% of the Company's outstanding common stock. In connection with the merger, each option to purchase Company common stock that is outstanding, whether vested or unvested, shall be cancelled at the effective time of the merger and converted into the right to receive, net of any applicable withholding taxes, cash in an amount equal to the excess of the Per Share Merger Consideration over the exercise price payable per share of Company common stock issuable under each option. The Per Share Merger Consideration of $13.50 represents a premium of approximately 47% over the closing price on March 26, 2012, the last trading day prior to the Company's announcement on March 27, 2012 that it had received a "going private" proposal from Mr.Xianfu Zhu.
Parent and Merger Sub intend to finance the merger through a combination of an equity commitment of$85 million by China Wealth Growth Fund I L.P. and a $320,000,000 term loan facility from China Development Bank Corporation Hong Kong Branch.
The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee formed by the Board of Directors, approved the Merger Agreement and the merger and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. The Special Committee, which is composed solely of independent and disinterested directors, negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.
The merger, which is currently expected to close in the first quarter of 2013, is subject to the adoption of the Merger Agreement by an affirmative vote of (i) stockholders holding at least a majority of the outstanding shares of Company common stock and (ii) stockholders holdings at least a majority of the outstanding shares of the Company's common stock other than shares owned by Parent, Merger Sub, the Rollover Holders or any of their respective affiliates at a special meeting of the Company's stockholders which will be convened to consider the adoption of the Merger Agreement, as well as certain other customary closing conditions. The merger agreement may be terminated under certain circumstances, including, among others, termination by mutual agreement of the parties or by either party if the merger is not consummated on or before November 26, 2013. In addition, the Company (acting upon the recommendation of the Special Committee) may terminate the Merger Agreement at any time for any reason on or prior to January 25, 2013 as set forth in the Merger Agreement. Mr. Xianfu Zhu and the other Rollover Holders have agreed under a voting agreement to vote all of the shares of Company common stock owned by them (which, as of the date of the Merger Agreement, comprises an aggregate of approximately 26% of the outstanding shares of the Company's common stock) in favor of the adoption of the Merger Agreement. If completed, the merger will, under Delaware law, result in the Company becoming a privately-held company, wholly-owned by Parent. Following the merger, the Company's common stock will no longer be listed on the NASDAQ Global Select Market.
Akin Gump Strauss Hauer & Feld LLP is serving as United States legal advisor to the Special Committee and O'Melveny & Myers LLP is serving as United States legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as United States legal advisor to the buyer group. Credit Suisse is serving as financial advisor to the buyer group.
Original source: Zhongpin
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CHINA: Zhongpin CEO takes meat firm private
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