On November 29, 2018, He’nan Thinker Automatic Equipment Co., Ltd. (“Thinker” or the “Listed Company”, 603508.SH) obtained approval for issuing shares, paying cash to purchase assets and raising supporting funds (i.e., related transactions). In this transaction, Thinker issued shares at a price of RMB 153 million and paid cash to acquire 51% equity of He’nan Lanxin Technology Co., Ltd. (“Lanxin Technology” or the “Target Company”). Meanwhile, it issued shares to no more than 10 other specific investors to raise a supporting fund of RMB 980 million. As Thinker’s previous acquisition by cash of 49% equity of Lanxin Technology has been closed, and after completion of this transaction, Lanxin Technology will become Thinker’s wholly-owned subsidiary.
Thinker is a leading provider of rail transit control and information systems in China. Founded in 2006, Lanxin Technology is a professional high-speed railway equipment, data service and solution provider in China. As two leading companies in the railway safety in Zhengzhou City, the heart of China Railway, the alliance between Thinker and Lanxin Technology is conducive to the realization of a “high-speed rail strategy” of the Listed Company and accelerates the promotion of “railway information management and big data applications”. It is a model for acquisitions in China's railway industry.
Due to different interests of the Target Company’s shareholders, the project is divided into two steps: acquisition of 49% equity and acquisition of 51% equity. On March 7, 2018, the Listed Company signed a relevant agreement with the transaction counterparty in the 49% equity acquisition. On April 27, 2018, the Listed Company announced the completion of the transfer of the 49% equity of Lanxin Technology in cash to complete the transfer. On May 26, 2018, Thinker signed a relevant agreement with the transaction counterparty for the 51% equity of Lanxin Technology, and announced the trading plan on May 29, 2018. On July 14, 2018, Thinker announced the Transaction Report (Draft). On October 29, 2018, the Listco M&A and Restructuring Review Committee reviewed and approved the transaction of issuing shares, paying cash for the 51% equity of Lanxin Technology and raising the supporting funds. On November 29, 2018, the China Securities Regulatory Commission issued the No.  1979 approval to approve the transaction.
This project is the first case in which an enterprise after rejection of its IPO application obtained approval for contributing assets in a listed company by way of restructuring, after the publication of the Questions and Answers of China Securities Regulatory Commission Regarding Participation in Restructuring Transactions of a Listed Company by an Enterprise as an Underlying Asset after Rejection of its IPO Application in February 2018. In addition, there is a big difference in the valuation of the two-step transactions and the two-step trading interval is extremely short, for which there are few market precedents that can be referenced. JunHe, as legal counsel for the Listed Company, designed a trading plan that conformed to the commercial arrangements of the parties and assisted in the completion of complex rectification work, which effectively promoted the smooth implementation of the project.
As legal counsel for Thinker, JunHe participated throughout the project, mainly in the design of transaction plans, the drafting and review of transaction documents and announcement documents, the drafting of legal opinions, the report of major asset restructuring, and the review of independent financial consultant reports, and revision and help in responding to feedback from the Shanghai Stock Exchange and the China Securities Regulatory Commission. During the 7 months of the project, the JunHe team had efficiently communicated and cooperated with Thinker, Lanxin Technology and other intermediaries, which effectively facilitated the successful approval of the project according to schedule, and obtained unanimous recognition and high appraise from the client and all other parties concerned.