The China Association for Public Companies (CAPCO) released its “Top 10 M&A and Restructuring Cases in the Capital Market” during its recent 10 year anniversary of  its establishment. The cases were divided into four groups by M&A and restructuring types: Cases of Industrial Restructuring in the Capital Market, Cases of Overall Listing in the Capital Market, Cases of Cross-border M&A in the Capital Market and Cases of De-risking in the Capital Market. Six JunHe cases were selected.

Top 10 M&A and Restructuring Cases in the Capital Market

JCET’s Acquisition of STATS ChipPAC by Tender Offer

In August 2015, Jiangsu Changjiang Electronics Technology Co. Ltd. (“JCET”, with stock code 600584.SH), along with the National Integrated Circuit Industry Investment Fund Co., Ltd. and Siltech Semiconductor (Shanghai) Co., Ltd., completed the acquisition of STATS ChipPAC, a listing company in Singapore, by tender offer and on a voluntary and conditional basis. The total consideration for the equity purchase was approximately USD 780 million, corresponding to the value of STATS ChipPAC of USD 1.8 billion. This was the first cross-border acquisition of a top-tier international semiconductor assembly and test company by an A-share listed company in China and was the largest ever acquisition of control in the global IC assembly and testing industry. To raise funds for the transaction, the acquirer engaged a banking consortium comprising of the Bank of China, the China Development Bank, the Export-Import Bank of China, the ICBC Macau Branch and other banks to provide loans for the acquisition. 

As the Chinese counsel of STATS ChipPAC in the transaction, JunHe’s M&A team provided legal services throughout the acquisition. This included designing the transaction structure, reviewing and revising the transaction documents, assisting with the negotiation of the transaction documents, issuing Chinese legal opinions, providing advice as to the Chinese laws in respect of the acquisition, and assisting STATS ChipPAC with the closing of the transaction.

As the Chinese counsel of the banking consortium in the transaction, JunHe’s finance team provided legal services throughout the financing for the transaction. These services included designing the transaction structure, drafting and assisting with the negotiation of the transaction documents, issuing legal opinions, providing advice as to the transaction and applicable laws, assisting the banking consortium with the disbursement and the closing of the transaction.

JunHe’s M&A team was led by JunHe partner Mr. ZHANG, Zhongmin (Jommy). JunHe’s finance team was led by Mr. ZHOU, Hui (Nelson), and Mr. YUAN, Yifeng (Vincent) was responsible for undertaking the project. 

Industrial Restructuring in the Capital Market

ZTE’s Acquisition of Sanechips

On March 31, 2021, the application filed by Zhongxing Telecommunication Equipment Corporation to issue shares to purchase assets and raise supporting funds was passed by the Listed Company Mergers and Acquisitions Review Committee of China Securities Regulatory Commission (CSRC) and approved by CSRC in May 2021. ZTE intended to issue shares to: (i) purchase the 18.8219% equity interests in Sanechips Co., Ltd. (a wholly owned subsidiary of ZTE) that were held by the minority shareholders of Sanechips; (ii) privately issue shares to no more than 35 investors to raise funds in an amount of RMB 261,000.00. The funds raised by ZTE were purported to be used for the R&D of key 5G chips and for supplementing ZTE’s working capital.

JunHe was the counsel of the issuer in this project. They assisted in the preparation of the issuance plan, conducted due diligence, drafted documents, prepared filing documents and drafted replies to the CSRC. JunHe’s assistance facilitated the completion of the project, and its professionalism, efficiency and advice were highly praised by ZTE and the other intermediates.

This project was led by Mr. WEI, Wei and undertaken by Mr. HUANG, Wei.

Cross-border M&A in the Capital Market

JCET’s Acquisition of STATS ChipPAC by Tender Offer

JunHe’s M&A team in this project was led by partner Mr. ZHANG, Zhongmin (Jommy). JunHe’s finance team was led by Mr. ZHOU, Hui (Nelson), and Mr. YUAN, Yifeng (Vincent) was responsible for undertaking the project.

Shenzhen Chiwan’s Issuance of Shares to Acquire China Merchants Port

JunHe assisted China Merchant Port in its acquisition of the controlling interests of China Merchants Port Group Co., Ltd. This was the first case of the sale of the controlling interests in a red-chip listed company to an A-share listed company. This project was noteworthy because: (i) it was the first case in which the controlling interests in a red-chip listed company were returned to the A-share market; and (ii) it was the first stock listed company on the Shenzhen Stock Exchange to change its stock code and complete the conversion of its A-share and B-share stock codes. This project related to a cross-border M&A and involved regulations in both mainland China and Hong Kong and legal issues in several other countries. JunHe assisted the client in completing several communications with, and obtaining the approvals/filings from, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the National Development and Reform Commission, the Ministry of Commerce, the Shenzhen Stock Exchange, the Foreign Trade Administration, the Hong Kong Securities Regulatory Commission and the Stock Exchange of Hong Kong.

This project was led by Mr. LIU, Yongzhao and Partner WEI, Wei, and internally reviewed by Mr. ZHAO, Jikui.

Strategic Restructuring between Chongqing Brewery and Carlsberg’s China Business

Carlsberg Group started its strategic investment in Chongqing Brewery Co., Ltd. (SH.600132, hereinafter “CBC”) in 2010 and became the controlling shareholder of CBC through a partial tender offer in 2013. Carlsberg Group undertook to CBC’s public shareholders that it would inject its domestic brewing assets and business that were potentially competitive with those of CBC into CBC in order to eliminate horizontal competition between them. 

In March 2020, CBC implemented a material asset restructuring through a combination of “transfer of existing shares + capital increase in kind/with equity interest + share purchase”, to inject competing assets and business into Chongqing Jianiang Brewery Co., Ltd., an existing joint venture between CBC and Carlsberg Group which was to be controlled by CBC. 27 proposals concerning the restructuring were all passed with 100% of affirmative votes, indicating the investors’ positive recognition of the transaction proposal.

In the material asset restructuring project, JunHe acted as the legal counsel to CBC and provided legal services throughout the whole process. This included a transaction structure design/proposal feasibility study, due diligence, the drafting and revision of the transaction documents, negotiation, issuance of legal opinions, and participating in communication with the stock exchange. The project was led by Mr. HUA, Xiaojun (Warren), primarily undertaken by Mr. LI, Ruochen and Mr. YI, Yisong, and internally reviewed by Mr. ZHAO, Jikui.

COFCO Property’s Acquisition of Joy City Property by Share Issuance

On December 4, 2018, the M&A and Restructuring Auditing Committee of CSRC unconditionally approved a material asset restructuring project in which COFCO Property (Group) Co., Ltd. (which has been renamed “Grandjoy Holdings Group Co., Ltd.”) was to acquire 9,133,667,644 ordinary shares held by Vibrant Oak Limited in Joy City Property Limited through the private offering of shares and to raise funds for the acquisition. The project was complex and subject to approval by or filing with domestic regulatory authorities such as the SASAC, MOFCOM, NDRC, SAMR and CSRC, and there were no similar cases to refer to during the implementation of the project. JunHe coordinated all communications with the  regulatory authorities, and designed the innovative transaction proposal, making the project an exemplary one in the capital market. 

JunHe acted as the domestic legal counsel to COFCO Property and provided legal services for the project throughout the whole process. This included participating in the demonstration of the transaction structure, assisting both parties with communications with governmental authorities regarding the transaction proposal, due diligence, drafting, reviewing, revising and negotiating the transaction agreement, coordinating and communicating with overseas lawyers, governmental approvals and closing, and issuing legal opinions.

The project was led by Mr. XIAO, Wei, Ms. BAI, Tao, Mr. SHI, Tiejun and Ms. ZHAO, Jun. It was undertaken by Ms. YE, Junli and Mr. LI, Ruochen.

Privatization of Home Inns Group by BTG Hotels

JunHe acted as the domestic legal counsel of BTG Hotels in a major project whereby BTG Hotels, an A-share listed subsidiary of Beijing Tourism Group Co., Ltd., acquired in cash and privatized the NASDAQ-listed Home Inns Group, made cross-border share swaps with major shareholders of Home Inns Group, and raised funds to finance the acquisition. JunHe provided legal services for the project throughout the whole process, including participating in the demonstration of the transaction structure, assisting both parties with communications with governmental authorities regarding the transaction proposal, due diligence, drafting, reviewing, revising and negotiating the transaction agreement, coordinating and communicating with overseas lawyers, anti-monopoly notification, governmental approvals and closing, and issuing legal opinions. Difficulties included the fact that there were no existing  precedents in the capital market, it had a complex transaction structure, there was the pursuit of different interests by the parties, and many domestic and foreign regulatory authorities were involved. It also included investigations of the counterparty and the target company across different jurisdictions, and nearly 20 intermediaries participated in the project. JunHe contributed greatly to the successful completion of the project in the capital market with its excellent coordination, organization and communication skills as well as its ability to identify and solve major and difficult legal issues.

The acquisition of Home Inns Group by BTG Hotels is an innovative case of the privatization of Chinese concepts stock and its return to the A-share market. In this project, the privatization of Chinese concepts stock and the cross-border share swap were implemented concurrently, whereby the one-step injection of an overseas listed company into an A-share listed company was creatively realized. This transaction scheme was the first ever of its kind in the A-share securities market. 

The project was led by Mr. WANG, Zhixiong, Ms. ZHANG, Zongzhen and Mr. ZHAO, Jikui.