Hollysys management to lead take-private deal at $1.8 bln valuation -sources

Hollysys Automation Technologies

02/09/2022 09:50

By Julie Zhu
    HONG KONG, Sept 2 (Reuters) - A consortium led by China's
Hollysys Automation Technologies  HOLI.O  management plans to
take the U.S.-listed automation and control system maker private
in a deal that would value the firm at $1.8 billion, people with
knowledge of the matter said.
    The management team, led by founder and Chief Executive
Officer Wang Changli, has won endorsement for the deal from the
municipal government of Beijing, where the company is based, the
people said.
    The team, acting under the local government's guidance, has
joined hands with a Beijing-based state firm for the potential 
deal, they added.
    Neither Hollysys nor Wang responded to Reuters requests for
comment. The Beijing municipal government also did not respond.
    The planned take-private deal reflects the consortium's view
that Hollysys, which was listed in New York in 2008, was
undervalued in the U.S. market, the people said. 
    Founded in 1993, the company trades at 13 times trailing
earnings on the Nasdaq, while its Shanghai-listed peer Zhejiang
Supcon Technology  688777.SS  has a comparable P/E multiple of
54, according to Refinitiv data.
    The consortium aims to bring a number of financial investors
into the take-private deal, including U.S. private equity firm
Warburg Pincus and Chinese venture capital firm Legend Capital,
the people said.
    The consortium has also held talks with banks to finance the
deal and is about to secure loans worth at least $1 billion from
Chinese lenders, led by ICBC (Asia), they added.
    State-owned lender ICBC (Asia) did not respond to a request
for comment. Warburg Pincus and Legend Capital had no comment on
the matter when contacted by Reuters.
    The people declined to be identified because the information
was not public.
    The consortium plans to offer about $29 per share to take
Hollysys private, the sources said, representing a premium of
81% to the firm's average share price over the past three months
of $16.

 (Reporting by Julie Zhu; Editing by Sumeet Chatterjee and
Edmund Klamann)
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