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Parkson Retail Group Limited — M&A Activity 2015
Jul 15, 2015
50826_rns_2015-07-15_35cc0e2d-c052-4cbb-a88a-372b6e9e956b.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 disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
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PARKSON RETAIL GROUP LIMITED 百盛商業集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 03368)
MAJOR AND CONNECTED TRANSACTION ACQUISITION OF SHARES IN PARKSON RETAIL ASIA LIMITED
Financial adviser to the Company
The Hongkong and Shanghai Banking Corporation Limited
The Board is pleased to announce that on 15 July 2015 (after trading hours), East Crest, PHB, Oroleon and the Company entered into the Agreement. Pursuant to the terms and conditions of the Agreement, subject to the fulfillment or waiver (as the case may be) of the Conditions Precedent, East Crest has agreed to sell and Oroleon has agreed to purchase the Sale Shares, representing approximately 67.6% of the entire share capital of the Target Company for the Consideration in the amount of S$228,508,716.70 (equivalent to approximately HK$1,313,742,314). The Consideration shall be satisfied by cash at Completion.
As one or more of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Acquisition is more than 25% but less than 100%, the Acquisition constitutes a major transaction of the Company and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.
As PHB, a substantial Shareholder interested in 1,448,270,000 Shares, representing approximately 53.1% of the total issued Shares as at the date of this announcement, is the sole beneficial owner of East Crest, each of PHB, East Crest and their respective associates are connected persons of the Company. Accordingly, the Acquisition constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules, and is subject to the reporting, announcement and Independent Shareholders’ Approval requirements pursuant to Chapter 14A of the Listing Rules.
A circular containing, among others, (i) details of the Acquisition, (ii) the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders, (iii) the recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Acquisition together with (iv) the notice of EGM is expected to be despatched to the Shareholders on or before 31 August 2015 (barring any unforeseen circumstances), as the Company will require more than 15 business days (as defined under the Listing Rules) to prepare the relevant information to be included in the circular, in particular the financial information of the Target Group.
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Completion is subject to the Conditions Precedent having been satisfied or waived (as the case may be), including (amongst other things) the approval of the Acquisition by the Independent Shareholders. As such, the Acquisition may or may not materialise. Shareholders and potential investors should therefore exercise caution when dealing in the Shares of the Company.
THE ACQUISITION
The Board is pleased to announce that on 15 July 2015 (after trading hours), East Crest, PHB, Oroleon and the Company entered into the Agreement in relation to the sale and purchase of the Sale Shares, representing approximately 67.6% of the entire share capital of the Target Company.
The major terms of the Agreement are set out below.
THE AGREEMENT
Date
15 July 2015
Parties
-
(a) East Crest, as vendor;
-
(b) PHB, as vendor guarantor;
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(c) Oroleon, as purchaser; and
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(d) the Company, as purchaser guarantor.
Assets to be acquired
The Sale Shares, representing approximately 67.6% of the entire share capital of the Target Company.
The Sale Shares to be acquired by Oroleon shall be free from all liens, charges and encumbrances and together with all rights attaching to them, including all rights to any dividend or other distribution declared, made or paid on or after the date of the Agreement.
Consideration
The Consideration payable for the Sale Shares shall be S$228,508,716.70 (which is equivalent to approximately HK$1,313,742,314), which shall be satisfied by Oroleon by cash at Completion.
The Consideration was determined after arm’s length negotiations between East Crest and Oroleon on normal commercial terms with reference to the one-month VWAP of the Target Company between 7 June 2015 to 6 July 2015 of S$0.499 (being the consideration per Sale Share), representing a 6.2% premium to the closing share price of the Target Company of S$0.470 on 14 July 2015, the last trading day before this announcement.
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Conditions Precedent
Completion is conditional upon the fulfillment or waiver of, as the case may be, the Conditions Precedent, including without limitation the following, on or before the Long Stop Date:
-
(a) Oroleon having completed due diligence of the Target Group to its satisfaction;
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(b) the Target Company having obtained all necessary approvals, licenses and permits required under its articles of association, applicable laws, rules and regulations in respect of, among other things, the transactions contemplated under the Agreement;
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(c) the Target Group having obtained all necessary consents and waivers required under contractual arrangements in respect of, among other things, the transactions contemplated under the Agreement;
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(d) the SIC Ruling having been obtained by the Company and remaining in force and not being revoked or withdrawn on the Completion Date;
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(e) PHB having obtained its shareholders’ approval and all other necessary approvals required under its articles of association, applicable laws, rules and regulations, including pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, in respect of, among other things, the transactions contemplated under the Agreement;
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(f) the Company having obtained all necessary approvals for the transactions contemplated under the Agreement required under its articles of association, applicable laws, rules and regulations, including the passing by the Independent Shareholders at the EGM of all resolutions required under the Listing Rules;
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(g) the current listing of the Target Company Shares not having been withdrawn, the Target Company Shares continuing to be traded on the SGX-ST prior to the Completion Date (save for any trading halt); and
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(h) Oroleon being satisfied with the financing arrangements in connection with the transactions contemplated under the Agreement and such financing arrangements being in compliance with all applicable laws, regulations, including the Listing Rules.
All the Conditions Precedent above (save and except for paragraphs (b), (e) and (f) above) may be waived by Oroleon in writing. The waiver by Oroleon of any of the Conditions Precedent set out in paragraphs (d), (g) and (h) is subject to compliance by the parties to the Agreement with all applicable laws, rules and regulations, including The Singapore Code on Take-overs and Mergers, the SGX-ST Listing Manual, the SG Securities and Futures Act and the Listing Rules.
If the Conditions Precedent are not fulfilled or (where applicable) waived in accordance with the Agreement by the Long Stop Date, the Agreement shall cease to be of any effect except certain clauses including but not limited to confidentiality clause and save in respect of any claims arising out of any antecedent breach of the Agreement.
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Completion
Completion shall take place on the Completion Date. Upon Completion, Oroleon will hold approximately 67.6% of the entire share capital of the Target Company, which will become a subsidiary of the Company.
Guarantee
In consideration of East Crest and PHB entering into the Agreement, the Company has agreed to guarantee the performance by Oroleon of its obligations under the Agreement. In consideration of Oroleon and the Company entering into the Agreement, PHB has agreed to guarantee the performance by East Crest of its obligations under the Agreement.
INFORMATION OF THE TARGET GROUP
The Target Company is a company incorporated in Singapore and is listed on the Main Board of the SGX-ST. The principal business of the Target Company is the operation and management of department stores in Southeast Asia. As at 15 July 2015, the Target Company operates an extensive network of 67 stores (including 1 supermarket), spanning approximately 794,000 sqm of gross floor area across cities in Malaysia, Vietnam, Indonesia and Myanmar.
Financial Information of the Target Group
A summary of the audited results of the Target Group for each of the two financial years ended 30 June 2013 and 2014 is set out below.
| For the financial year ended | For the financial year ended | |
|---|---|---|
| 30 June 2013 (restated) | 30 June 2014 | |
| (S$’000)/(HK$’000) | (S$’000)/(HK$’000) | |
| Revenue | 446,728 | 432,037 |
| (equivalent to approximately | (equivalent to approximately | |
| HK$2,568,329) | HK$2,483,867) | |
| Profit before taxation | 52,525 | 46,274 |
| (equivalent to approximately | (equivalent to approximately | |
| HK$301,977) | HK$266,038) | |
| Profit after taxation | 37,491 | 32,577 |
| (equivalent to approximately | (equivalent to approximately | |
| HK$215,543) | HK$187,292) | |
| Profit attributable to | 39,048 | 34,901 |
| equity holder | (equivalent to approximately | (equivalent to approximately |
| HK$224,495) | HK$200,653) |
As at 30 June 2014, the audited total equity of the Target Group amounted to approximately S$238,819,000 (which is equivalent to approximately HK$1,373,018,000).
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INFORMATION OF PHB AND THE VENDOR
PHB is a company incorporated in Malaysia and its shares are listed on the Main Market of Bursa Malaysia Securities Berhad. The principal business of PHB is investment holding. East Crest is an investment holding company incorporated in the British Virgin Islands with limited liability and is a direct wholly-owned subsidiary of PHB. The original acquisition cost of the 2 ordinary shares of the Target Company (representing the entire share capital of the Target Company at the time) by East Crest was RM 5 (which is equivalent to approximately HK$10) and the Target Company was acquired in March 2011. The carrying amount of the investment in the Sales Shares as at 30 June 2014 was RM 299,645,475 (which is equivalent to approximately HK$609,688,648).
A separate announcement will be made by PHB in respect of the proposed sale of the Sale Shares to Oroleon on the Bursa Malaysia Securities Berhad.
INFORMATION OF THE GROUP AND THE PURCHASER
The principal activities of the Group are the operation and management of a network of department stores in the PRC. Oroleon is an investment holding company incorporated in Hong Kong and an indirect wholly-owned subsidiary of the Company.
EFFECT OF THE ACQUISITION
After Completion, the Company will hold approximately 67.6% of the entire share capital of the Target Company, and will become a subsidiary of the Company. The financial results, assets and liabilities of the Target Group will be consolidated with the accounts of the Company.
REASONS FOR AND BENEFITS OF THE ACQUISITION
The Group is principally engaged in the operation and management of department stores offering a range of brands of fashion and lifestyle related merchandise in China. Given the Target Company’s retail business is in an identical retail format as that of the Group’s, this would enable the Group to realise economies of scales across Asia when negotiating with suppliers for better terms.
Furthermore, the acquisition would allow the Group to geographically diversify into high growth markets enabling the Group to seek opportunities in, and exposure to, the growing South East Asian markets (including Malaysia, Indonesia, Vietnam and Myanmar).
As the Target Company has an established platform in Southeast Asia, this would allow the Group to establish an immediate foothold in the region, with a unique geographic footprint of 67 stores (including 1 supermarket) as at 15 July 2015 across cities in Malaysia, Indonesia, Vietnam and Myanmar, and at Completion be one of the leading Pan-Asian department store retailers.
The terms of the Agreement were determined after arm’s length negotiations between the parties thereto. Having considered the reasons for and benefits of the Acquisition as mentioned above, the Board is of the view that the terms of the Agreements are fair and reasonable and are on normal commercial terms, in the ordinary and usual course of business and the Acquisition is in the interest of the Company and the Shareholders as a whole.
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IMPLICATIONS UNDER THE LISTING RULES
As one or more of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Acquisition is more than 25% but less than 100%, the Acquisition constitutes a major transaction of the Company and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.
In the event that the SIC Ruling is not obtained by the Company, and Oroleon waives the satisfaction of the Condition Precedent set out in paragraph (d) under the section headed “The Agreement – Conditions Precedent” above and elects to proceed with Completion, Oroleon will be required to comply with all the requirements under the SG Securities and Futures Act and The Singapore Code on Take-overs and Mergers, including without limitation, the making of a mandatory general offer for the Target Company as a result of the transactions contemplated under the Agreement. In these circumstances, assuming the offer price of the general offer is the same as the consideration per Sale Share under the Agreement, the Acquisition together with the general offer for all the Target Company Shares will remain a major and connected transaction of the Company based on the percentage ratios calculated as at the date of this announcement. The Company will comply with all relevant requirements under the Listing Rules in the event the Company proceeds under these circumstances.
As PHB, a substantial Shareholder interested in 1,448,270,000 Shares, representing approximately 53.1% of the total issued Shares as at the date of this announcement, is the sole beneficial owner of East Crest, each of PHB, East Crest and their respective associates are connected persons of the Company. Accordingly, the Acquisition constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules, and is subject to the reporting, announcement and Independent Shareholders’ Approval requirements pursuant to Chapter 14A of the Listing Rules.
GENERAL
A circular containing, among others, (i) details of the Acquisition, (ii) the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders, (iii) the recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Acquisition together with (iv) the notice of EGM is expected to be despatched to the Shareholders on or before 31 August 2015 (barring any unforeseen circumstances), as the Company will require more than 15 business days (as defined under the Listing Rules) to prepare the relevant information to be included in the circular, in particular the financial information of the Target Group.
An independent financial adviser will be appointed to advise the Independent Board Committee of the Company and the Independent Shareholders regarding the Acquisition. An Independent Board Committee of the Company has been appointed to advise the Independent Shareholders on whether or not the Acquisition is in the interest of the Company and is fair and reasonable so far as the Independent Shareholders are concerned.
The Directors shall seek the approval of the Independent Shareholders on the Acquisition at the EGM. Each of PHB, East Crest and their respective associate(s) shall abstain from voting on the resolution approving the Agreement and the Acquisition contemplated thereunder in accordance with Rule 14A.36 of the Listing Rules. Any vote exercised by the Independent Shareholders at the EGM shall be taken by poll.
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Completion is subject to the Conditions Precedent having been satisfied, including (amongst other things) the approval of the Acquisition by the Independent Shareholders. As such, the Acquisition may or may not materialize. Shareholders and potential investors should therefore exercise caution when dealing in the shares of the Company.
DEFINITIONS
In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:
| “Acquisition” | the proposed acquisition by the Company of the Sale Shares from |
|---|---|
| East Crest pursuant to the Agreement | |
| “Agreement” | the agreement in relation to the sale and purchase of the Sale |
| Shares dated 15 July 2015 entered into among East Crest, PHB, | |
| Oroleon and the Company | |
| “associates” | has the meaning ascribed thereto under the Listing Rules |
| “Board” | the board of Directors |
| “business day” | a day (other than Saturday, Sunday and public holiday) on which |
| (i) banks in Hong Kong, Kuala Lumpur, Malaysia, Shanghai, PRC | |
| and Singapore are open for business, and (ii) the SGX-ST is open | |
| for trading in securities | |
| “Company” | Parkson Retail Group Limited (百盛商業集團有限公司), a |
| company incorporated under the laws of the Cayman Islands | |
| with limited liability, the Shares of which are listed on the Stock | |
| Exchange | |
| “Completion” | completion of the sale and purchase of the Sale Shares in |
| accordance with the Agreement | |
| “Completion Date” | within three business days after the day on which the last of the |
| Conditions Precedent are fulfilled or waived in accordance with | |
| the Agreement (or such other date as East Crest and Oroleon may | |
| agree in writing prior to Completion) | |
| “Condition(s) Precedent” | the condition(s) precedent to completion as set out in the |
| Agreement | |
| “connected person(s)” | has the meaning ascribed thereto under the Listing Rules |
| “Consideration” | S$228,508,716.70 (equivalent to approximately HK$1,313,742,314), |
| being the total consideration payable by Oroleon to East Crest for the | |
| acquisition of the Sale Shares pursuant to the Agreement | |
| “Directors” | the directors of the Company |
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| “East Crest” | East Crest International Limited, a wholly-owned subsidiary of |
|---|---|
| PHB | |
| “EGM” | the extraordinary general meeting of the Company to be held for |
| the purpose of the Independent Shareholders to consider, and if | |
| thought fit, approve the Acquisition | |
| “Group” | the Company, its subsidiaries, a joint venture and an associate |
| “HK$” | Hong Kong dollar(s), the lawful currency of Hong Kong |
| “Hong Kong” | means the Hong Kong Special Administrative Region of the |
| People’s Republic of China | |
| “Independent Board | the board committee comprising all independent non-executive |
| Committee” | Directors, namely Mr. Ko Tak Fai, Desmond, Mr. Yau Ming Kim, |
| Robert and Dato’ Fu Ah Kiow, which has been established by the | |
| Board for the purpose of advising the Independent Shareholders | |
| in relation to the Agreement and the transactions contemplated | |
| thereunder | |
| “Independent Shareholders” | means the Shareholders other than PHB, East Crest and their |
| respective associate(s) | |
| “Independent Shareholders’ | the approval by the Independent Shareholders at the EGM in |
| Approval” | respect of the Agreement and the transactions contemplated |
| thereunder | |
| “Listing Rules” | the Rules Governing the Listing of Securities on the Stock |
| Exchange | |
| “Long Stop Date” | the expiry of six months from the date of the Agreement (or such |
| other date as Oroleon and East Crest may agree in writing) | |
| “Oroleon” | Oroleon (Hong Kong) Limited, a wholly-owned subsidiary of the |
| Company | |
| “PHB” | Parkson Holdings Berhad, a company incorporated in Malaysia |
| and listed on the Main Market of Bursa Malaysia Securities | |
| Berhad | |
| “PRC” | The People’s Republic of China, and for the purpose of |
| this announcement, excluding Hong Kong, Macau Special | |
| Administrative Region of the PRC and Taiwan | |
| “RM” | Malaysian Ringgit |
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| “Sale Shares” | the 457,933,300 ordinary shares in the capital of the Target |
|---|---|
| Company to be acquired by the Company pursuant to the | |
| Agreement, representing approximately 67.6% of the entire share | |
| capital of the Target Company | |
| “Shareholder(s)” | the holder(s) of the Share(s) |
| “Share(s)” | the ordinary share(s) of the Company with a nominal value of |
| HK$0.02 each | |
| “SG Securities and | Securities and Futures Act (Chapter 289 of Singapore) |
| Futures Act” | |
| “SGX-ST” | Singapore Exchange Securities Trading Limited |
| “SGX-ST Listing Manual” | the Listing Manual of SGX-ST |
| “SIC” | Securities Industry Council of Singapore |
| “SIC Ruling” | the ruling from the SIC that Oroleon will not be required under |
| Rule 14.1 of The Singapore Code on Take-overs and Mergers | |
| to make a mandatory general offer for the Target Company as a | |
| result of the transactions contemplated under the Agreement | |
| “Stock Exchange” | The Stock Exchange of Hong Kong Limited |
| “S$” | Singapore Dollar(s), the lawful currency of Singapore |
| “Target Company” | Parkson Retail Asia Limited, a company incorporated in Singapore |
| with limited liability, whose shares are listed and quoted on the | |
| Main Board of the SGX-ST | |
| “Target Company Shares” | the ordinary shares of the Target Company |
| “Target Group” | the group of companies consisting of the Target Company and its |
| subsidiaries as set out in the annual report of the Target Company | |
| for the financial year ended 30 June 2014 and as announced by | |
| the Target Company from time to time | |
| “VWAP” | volume weighted average market price calculated as total daily |
| trading value divided by total daily trading volume for the | |
| relevant period | |
| “%” | per cent |
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Unless otherwise stated in this announcement, translations of S$ into HK$ and RM into HK$ are made at the rate of S$1.00 to HK$5.7492 and RM1.00 to HK$2.0347 for information purpose only. Such conversion should not be construed as a representation that any amount has been, could have been or may be converted at the above rate or at all.
By order of the Board PARKSON RETAIL GROUP LIMITED Tan Sri Cheng Heng Jem Executive Director & Chairman
Hong Kong, 15 July 2015
As at the date of this announcement, the Executive Directors of the Company are Tan Sri Cheng Heng Jem and Mr. Chong Sui Hiong, the Non-executive Directors are Datuk Lee Kok Leong and Dato’ Dr. Hou Kok Chung and the Independent Non-executive Directors are Mr. Ko Tak Fai, Desmond, Mr. Yau Ming Kim, Robert and Dato’ Fu Ah Kiow.
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