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HG Semiconductor Limited M&A Activity 2025
51082_rns_2025-03-18_91a3948e-c584-4875-b4a6-efc83eb28e6f.pdf
M&A Activity
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
HG SEMICONDUCTOR LIMITED
宏光半導體有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 6908)
INSIDE INFORMATION
MEMORANDUM OF UNDERSTANDING IN RELATION TO POSSIBLE ACQUISITION OF THE TARGET EQUITY INTERESTS IN SHENZHEN HUAXINBANG TECHNOLOGY
This announcement is made by the Company pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the SFO.
The Board would like to announce that on 18 March 2025 (after trading hours), the Company entered into the non-legally binding MOU with Mr. Lai Zelian (賴澤聯先生) and Nanning Industrial Investment Emerging No. 1 Investment Fund Partnership (Limited Partnership) (南寧產投新興一號投資基金合夥企業(有限合夥)) in relation to the intentions of the parties concerning the Possible Acquisition of the Target Equity Interests in Shenzhen Huaxinbang Technology. The Company and the Vendors have agreed to negotiate and discuss in good faith with a view to entering into the Formal Agreement on or before the expiry date of the Exclusivity Period. Details of the Possible Transaction, including, among other things, the Consideration, the method of settlement and the payment schedule of the Consideration, are subject to further negotiation between the parties to the MOU and, if agreed, will be set out in the Formal Agreement.
In the event the Possible Acquisition materialises, the Possible Acquisition may constitute a very substantial acquisition of the Company under Chapter 14 of the Listing Rules. Further announcement(s) will be made in respect of the Formal Agreement and/or the development of the Possible Acquisition as and when appropriate in compliance with the Listing Rules.
The Company wishes to emphasise that no legally binding agreement in relation to the Possible Acquisition has been entered into by the Company as at the date of this announcement. Shareholders and potential investors of the Company should note that the Possible Acquisition may or may not materialise and the final structure and terms of the Possible Acquisition, which are subject to further negotiations between the parties, have yet to be finalised and may deviate from those set out in the MOU. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.
This announcement is made by the Company pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the SFO.
The Board would like to announce that on 18 March 2025 (after trading hours), the Company entered into the non-legally binding MOU with the Vendors in relation to the intentions of the parties concerning the Possible Acquisition.
THE MEMORANDUM OF UNDERSTANDING
Date: 18 March 2025
Parties:
(i) The Company;
(ii) Mr. Lai Zelian (賴澤聯先生) (“Mr. Lai”); and
(iii) Nanning Industrial Investment Emerging No. 1 Investment Fund Partnership (Limited Partnership) (南寧產投新興一號投資基金合夥企業(有限合夥)) (“Nanning Industrial Investment Fund”)
To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, Mr. Lai and Nanning Industrial Investment Fund and its ultimate beneficial owner(s) are Independent Third Parties.
Target Equity Interests proposed to be acquired
Not less than 19.99% and not exceeding 29.99% of the equity interests of Shenzhen Huaxinbang Technology.
Consideration
The Consideration is intended to be determined based on the valuation to be conducted by an independent valuer on the entire equity interests of Shenzhen Huaxinbang Technology, subject to further negotiation between the parties to the MOU and to be determined in the Formal Agreement.
The Consideration is intended to be settled by the Company by the allotment and issue of Consideration Shares by the Company, credited as fully paid, to the Vendors (or their respective nominees) at Completion and the issue price per Share and the number of the Consideration Shares is subject to negotiation between the parties to the MOU and to be based on an independent valuation of the Company by the Company and the Vendors.
Details of the Possible Transaction, including, among other things, the Consideration, the method of settlement and the payment schedule of the Consideration, are subject to further negotiation between the parties to the MOU and, if agreed, will be set out in the Formal Agreement.
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Conditions Precedent to the Possible Acquisition
Completion of the Possible Acquisition is expected to be conditional upon the fulfillment or waiver (if applicable) of the following conditions precedent:
(1) the Company and the Vendors being satisfied with the financial, legal, business, and operational and other due diligence matters regarding Shenzhen Huaxinbang Technology and the Company respectively, with each relevant party having reasonable access to records and affairs of Shenzhen Huaxinbang Technology or (as the case may be) the Company and assistance from their respective directors, employees, and representatives during the due diligence process;
(2) all approvals and consents being obtained as required under the Listing Rules;
(3) (if required) the approval by the Shareholders (or, if so applicable, the independent Shareholders) of the resolution for the transactions (including but not limited to allotment and issue of Consideration Shares under specific mandate) contemplated under the Formal Agreement at an extraordinary general meeting of the Company to be convened in accordance with the relevant laws and regulations (including but not limited to the Listing Rules);
(4) the issuance of valuation report on Shenzhen Huaxinbang Technology by an independent valuer in form and content reasonably satisfactory to the Company;
(5) the issuance of PRC legal opinion by PRC legal advisor appointed by the Company for the Possible Acquisition as of the date of Completion in such form and substance having been previously agreed upon and approved by the Company;
(6) the Company having received the audited consolidated financial statements of Shenzhen Huaxinbang Technology for the three financial years ended 31 December 2024, and (if required) the additional audited consolidated financial statements of Shenzhen Huaxinbang Technology for the period ending 31 March 2025, issued by an auditor appointed by the Company;
(7) all permits, approvals, consents, authorizations, confirmations and certificates required for the transactions from any relevant governments or regulatory authorities (including any relevant stock exchanges) or other relevant third parties in connection with the Possible Acquisition having been obtained; and
(8) any other conditions to be agreed upon by the Company and the Vendors under the Formal Agreement.
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Formal Agreement
The Company and the Vendors have agreed to negotiate and discuss in good faith with a view to entering into the Formal Agreement on or before the expiry date of the Exclusivity Period.
Effective date and Exclusivity Period
The MOU shall be effective for twelve months from the date of the MOU. The Vendors shall not negotiate or enter into any agreement (whether verbal or written) or memorandum of understanding with any other person in respect of the Possible Acquisition during the Exclusivity Period. The Exclusivity Period may be early terminated or extended subject to written agreement between the parties to the MOU.
Termination
If (1) the Company and the Vendors have agreed in writing to terminate the negotiations and discussion on the Possible Acquisition; or (2) the Company and the Vendors are unable to enter into the Formal Agreement within the Exclusivity Period (whichever is earlier), the MOU (save for the provisions expressed to survive the termination of the MOU) shall cease and none of the parties thereto shall have any claim against the others.
Binding Effect
Except for the clauses on the effective period of the MOU, the Exclusivity Period, confidentiality, fees and expenses, termination, governing law, and binding effect, all other clauses set out in the MOU are subject to negotiations and execution of the Formal Agreement and are not binding upon the Company and the Vendors.
INFORMATION OF THE VENDORS
Mr. Lai
Mr. Lai Zelian is a PRC individual and is the founder of Shenzhen Huaxinbang Technology who serves as an executive director, chief executive officer and legal representative of Shenzhen Huaxinbang Technology, with approximately 20 years of experience in the semiconductor industry.
To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, Mr. Lai is an Independent Third Party.
Nanning Industrial Investment Fund
Nanning Industrial Investment Fund is a limited partnership established in the PRC in 2021.
To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, Nanning Industrial Investment Fund and its ultimate beneficial owner(s) are Independent Third Parties.
INFORMATION OF SHENZHEN HUAXINBANG TECHNOLOGY GROUP
Shenzhen Huaxinbang Technology is a company established in the PRC with limited liability in 2008 and headquartered in Shenzhen, the PRC. It is principally engaged in research, development, manufacturing and sales of semiconductors. Shenzhen Huaxinbang Technology Group has built a comprehensive nationwide industrial framework featuring independent research and development capabilities and in-house production and packaging facilities for semiconductor manufacturing.
Shenzhen Huaxinbang Technology Group is led by a team of industry experts, including former management executives from leading multinational electronics corporations. The team features semiconductor scientists who have internationally leading expertise in fourth-generation semiconductor and experienced researchers who have research and development initiatives at leading electric vehicle manufacturers for over a decade and developed dozens of patented inventions. Since its establishment, Shenzhen Huaxinbang Technology Group has received strategic investments from state-funded institutions and recognition from leading industry suppliers and customers.
Shenzhen Huaxinbang Technology Group has been recognized for its technological innovations across multiple semiconductor domains which includes (i) its fourth-generation semiconductor temperature sensor having earned Second Prize at Municipal Level in the Innovation Competition (創新大賽市級二等獎) held by Shenzhen Science and Technology Innovation Commission (深圳市科技創新委員會); (ii) its neuromorphic chip supported with artificial intelligence being recognized by the Shenzhen Science and Technology Innovation Commission by selecting it as the Major Science and Technology Project in 2023 (2023年度科技重大專項); and (iii) its new generation panel AMOLED driver power chip being acknowledged by the Guangdong Science and Technology Department (廣東省科學技術廳) and one of the research and development centres of Shenzhen Huaxinbang Technology Group being recognized as a provincial engineering technology research centre* (省級工程技術研究中心).
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REASONS FOR AND BENEFITS OF THE POSSIBLE ACQUISITION
The Company is an exempt company incorporated in the Cayman Islands. The Group is principally engaged in the design, development, manufacturing, subcontracting and sales of semiconductor products, including light-emitting diode (“LED”) beads, new generation of semiconductor gallium nitride (“GaN”) chips, and GaN device related application products in the PRC. With the Group’s expertise in LED manufacturing, strong scientific research team and research and development capability, the Group has in recent years devoted itself to the application of GaN-related products in the third-generation of semiconductors and has gradually achieved business transformation. The Group has continued to propel its overall business development and accelerate the realisation of chip manufacturing and production capacity, with the aim to become a semiconductor integrated device manufacturing (“IDM”) enterprise that spans the whole industry chain, including research and development, manufacturing, packaging and package testing, and sales, with a particular focus on semiconductor design and manufacturing, to create the best returns for the Shareholders.
As mentioned in the interim report of the Company for the six months ended 30 June 2024, the Group has installed two production lines for the epitaxial wafer production such as GaN-related products, and has completed the installation of equipment and production testing, which put the Group in a position to produce epitaxial wafers. In addition, the core machines imported from Europe and Japan have been delivered and are ready for chips manufacturing to meet the market needs. The Group has been actively seeking strategic partners and upgrade its industrial chain while upholding the principle of achieving synergy in the use of resources and win-win cooperation.
The Company believes that the Possible Acquisition represents a good opportunity for the Group to invest in a leading semiconductor enterprise with established clients bases and extensive networks in the semiconductor ecosystem. Following Completion, the Group is able to generate synergy with Shenzhen Huaxinbang Technology by combining the technology edges of the Group on the GaN third-generation semiconductor and the chip design, packaging and testing capabilities with those of Shenzhen Huaxinbang Technology Group. The collaboration between the Group and Shenzhen Huaxinbang Technology Group could also enhance efficiency and switching frequency of the Group’s LED products by applying GaN chips to be developed jointly by the Group and Shenzhen Huaxinbang Technology Group. The Possible Acquisition could also strengthen the Group’s market position in the semiconductor industry and is beneficial to the stable growth of the performance of the Group’s GaN and other semiconductor products business segment through the business cooperation with Shenzhen Huaxinbang Technology Group, which is in line with the Company’s long-term strategic interests.
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GENERAL
In the event the Possible Acquisition materialises, the Possible Acquisition may constitute a very substantial acquisition of the Company under Chapter 14 of the Listing Rules. Further announcement(s) will be made in respect of the Formal Agreement and/or the development of the Possible Acquisition as and when appropriate in compliance with the Listing Rules.
The Company wishes to emphasise that no legally binding agreement in relation to the Possible Acquisition has been entered into by the Company as at the date of this announcement. Shareholders and potential investors of the Company should note that the Possible Acquisition may or may not materialise and the final structure and terms of the Possible Acquisition, which are subject to further negotiations between the parties, have yet to be finalised and may deviate from those set out in the MOU. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.
DEFINITIONS
Terms used in this announcement have the following meanings unless the context otherwise requires:
"Board"
the board of Directors
"Company"
HG Semiconductor Limited (宏光半導體有限公司), a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 6908)
"Completion"
the completion of the Possible Acquisition pursuant to the terms and conditions of the Formal Agreement
"connected person(s)"
has the meaning ascribed to it under the Listing Rules
"Consideration"
the consideration payable by the Company to the Vendors for the Target Equity Interests
"Consideration Shares"
new Shares that may be allotted and issued by the Company to the Vendors (or their respective nominees) in settlement of the Consideration
"Director(s)"
director(s) of the Company
"Exclusivity Period"
the period of six months from the date of the MOU (or such longer period as may be agreed between the Company and the Vendors)
"Formal Agreement"
a formal sale and purchase agreement that may be entered into between the Company and the Vendors in relation to the Possible Acquisition
"Group"
the Company and its subsidiaries
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Third Party(ies)” person(s) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, is/are independent of the Company and its connected persons
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Lai” Mr. Lai Zelian* (賴澤聯先生), an Independent Third Party
“MOU” the memorandum of understanding dated 18 March 2025 entered into between the Company and the Vendors in relation to the Possible Acquisition
“Nanning Industrial Investment Fund” Nanning Industrial Investment Emerging No. 1 Investment Fund Partnership (Limited Partnership)* (南寧產投新興一號投資基金合夥企業(有限合夥)), a limited partnership established in the PRC, and an Independent Third Party
“Possible Acquisition” the possible acquisition of the Target Equity Interests by the Company from the Vendors
“PRC” the People’s Republic of China, which for the sole purpose of this announcement excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan
“RMB” Renminbi, the lawful currency of the PRC
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company
“Shareholder(s)” holder(s) of Shares(s)
“Shenzhen Huaxinbang Technology” Shenzhen Huaxinbang Technology Company Limited* (深圳市華芯邦科技有限公司), an investment holding company established in the PRC with limited liability
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Equity Interests” not less than 19.99% and not exceeding 29.99% of the equity interests of Shenzhen Huaxinbang Technology
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"Shenzhen Huaxinbang Technology Group"
Shenzhen Huaxinbang Technology and its subsidiaries
"Vendors"
Mr. Lai and Nanning Industrial Investment Fund
"%"
per cent.
By order of the Board
HG Semiconductor Limited
Dr. Xu Zhihong
Chairman and Executive Director
Hong Kong, 18 March 2025
As at the date of this announcement, the executive Directors are Dr. Xu Zhihong, Mr. Zhao Yi Wen, and Mr. Li Yang; and the independent non-executive Directors are Mr. Zou Haiyan, Mr. Siu Miu Man, Simon, MH. and Ms. Liu Wanwen.
If there is any inconsistency in this announcement between the English and Chinese versions, the English version shall prevail.
- For identification purpose only
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