Fangda advised Zhejiang Cangnan Instrument Group Co., Ltd. (“Cangnan Instrument“, stock code: 1743.HK) on its privatization through general offer by way of buy-back of all issued H-shares. Cangnan Instrument were officially delisted from the Hong Kong Stock Exchange at 9 a.m., July 5, 2021.
Cangnan Instrument’s unprecedented privatization offer by way of a share buy-back was the first-ever privatization transaction structure using such a mechanism on the main board of Hong Kong Stock Exchange. This innovative structure provides more flexibility for companies that intend to delist (for example, for listed companies with relatively dispersed shareholding structures) as an alternative privatization mechanism to shareholder general offers or schemes of arrangement. At the shareholders’ meetings of Cangnan Instrument in May, the privatization transaction was unanimously approved by the participating shareholders, and the offer acceptance rate of the H-share shareholders was almost 100% – indicating the value of this privatization mechanism, which is set to establish a precedent in the Hong Kong market.
Cangnan Instrument is a leading Chinese company specializing in the manufacture and sale of a variety of industrial and commercial gas flow meters, as well as having R&D, manufacturing, sales and after-sales service divisions. The delisting from H-share market will help the company save regulatory and compliance costs, increase its flexibility and efficiency in future business development, and enhance its core business development capabilities and competitiveness.
Fangda’s Hong Kong Capital Markets team acted as the Hong Kong legal counsel of Cangnan Instrument (the offeror) in this transaction, utilizing the firm’s leading strength in the privatization of Hong Kong-listed companies and synergistic cross-office advantages. In the transaction, we provided a full range of services, including: taking the lead in the design of the transaction structure; acting as the main contact party to communicate and liaise with the Hong Kong regulators including Securities and Futures Commission and the Hong Kong Stock Exchange; drafting and finalizing transaction documents; and assisting in transaction funding arrangements. The Fangda team was led by partners Peter Chen and Lawrence Wang. Partner Laurence Yuan provided support on transaction funds. Team members included Brian Kwok and Andrew Chan.