China's Hollysys to consider $1.55 bln takeover bid, seek other offers (updated)

Hollysys Automation Technologies

02/10/2023 12:40

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      Bid is latest after multiple offers to buy Hollysys
    

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      Deutsche Bank to solicit additional potential offers
    

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      Shares have gained 20.8% year-to-date
    

  
 (Adds context, details and background in paragraph 2, 3, 6,
8-12)
    By Kannaki Deka and Yantoultra Ngui
       Oct 2 (Reuters) - China's Hollysys Automation
Technologies  HOLI.O , which makes automation and control
systems, said on Monday it had set up a committee to consider a
$1.55 billion takeover offer from a consortium led by Recco
Control Technology and Dazheng Group Investment Holdings and
look at other offers.
    The Beijing-based company has already received multiple
other offers. If a sale goes ahead Nasdaq-listed Hollysys would
follow other Chinese companies that have recently delisted from
U.S. stock exchanges as their share prices looked undervalued
due to geopolitical tensions between the United States and China
over trade, technology and relations with Taiwan.
        Hollysys offers integrated services for industrial
automation and rail transport, according to its website, and its
control systems have been used in sensitive areas such as
nuclear power stations.
    In August, a consortium led by Recco Control Technology and
Dazheng Group Investment Holdings made an all-cash offer of $25
per share to buy the company. 
    The special committee will discuss the next steps with Recco
Control and Dazheng Group (Hong Kong) in response to the offer
to acquire the company, while expediting the process to seek
"additional serious and compelling offers," Hollysys said in a
statement. 
    Deutsche Bank will solicit additional potential offers on
behalf of Hollysys, it added.
    Besides the offer from Recco Control and Dazheng Group,
Reuters reported last month that a consortium led by Hollysys'
management planned to take the company private in a deal that
would value it at $1.8 billion. 
        Separately, Hollysys said its board had engaged with
shareholders who own 32.2% of the company following their push
for a special meeting in August amid mounting frustration with
the management for not starting a sale process. 
    The potential deal could also add to a growing list of
U.S.-listed Chinese companies coming back to the mainland or
Hong Kong in recent years as tensions mount between the two
countries.
    Five U.S.-listed Chinese state-owned companies, including
oil majors Sinopec  600028.SS  and PetroChina  601857.SS , said
in August they would voluntarily delist from the New York stock
exchange. 
    Shares of Hollysys, which listed in New York in 2008, have
risen 20.8% this year, giving it a market value of some $1.23
billion, but analysts say it is undervalued compared to a few
years ago or compared to peers listed in China. 
    Founded in 1993, Hollysys now has operations in China and
eight other countries and regions throughout Asia.
        It has carried out more than 45,000 projects in sectors
ranging from power and petrochemicals to high-speed and urban
rail, its website shows.

 (Reporting by Kannaki Deka in Bengaluru and Yantoultra Ngui in
Singapore; Editing by Anil D'Silva and Susan Fenton)
 ((Kannaki.Deka@thomsonreuters.com;))