WUMART STORES INC Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this joint 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 joint announcement.
This joint announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company nor shall there be any sale, purchase or subscription for securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful absent the filing of a registration statement or the availability of an applicable exemption from registration or other waiver. This joint announcement is not for release, publication or distribution in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.
物美控股集團有限公司
Wumei Holdings, Inc.*(a company incorporated in the People's Republic of China)
(a company incorporated in Hong Kong)
北京物美商業集團股份有限公司
Wumart Stores, Inc.*(a joint stock limited company incorporated in the People's Republic of China)
(Stock code: 01025)
Financial Adviser to the Offerors
for identification purposes only
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INTRODUCTION
On 5 October 2015, the Board received a notification from Wumei Holdings, the controlling shareholder of the Company, that voluntary conditional offers are being contemplated by Wumei Holdings and its wholly owned indirect subsidiary Wumei Hong Kong, for the H Shares and the Domestic Shares other than those owned, controlled or agreed to be acquired by the Offerors and parties acting in concert with any of them in accordance with the Takeovers Code which, if implemented, will result in the Delisting.
The Proposal is subject to a number of conditions as set out in this joint announcement, including the approval of the Delisting by Independent H Shareholders at the H Share Class Meeting, by Independent Domestic Shareholders at the Domestic Share Class Meeting and by Independent Shareholders at the EGM, in each case voting by way of a poll. In particular, the H Share Offer will only become unconditional if and when the H Share Offer Conditions have been satisfied or as the case may be waived. Accordingly, all references in this joint announcement to the Offers are references to the Offers that will become unconditional only if and when such conditions have been satisfied or as the case may be waived. Shareholders and/or potential investors should therefore exercise caution when dealing in the Shares. -
CONSIDERATION FOR THE OFFERS
Under the Proposal, Offers will be made by the Offerors or on their behalf in accordance with the provisions of the Takeovers Code on the following basis:
For each H Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$6.22 in cashFor each Domestic Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RMB5.07 in cash (equivalent of the H Share offer price in RMB)
The Offerors will not increase the consideration for the Offers as set out above.
The Offerors will finance the consideration payable in respect of the acceptances received under the Offers using their own cash resources. Somerley Capital has been appointed as the financial adviser to the Offerors in respect of the Offers and is satisfied that sufficient financial resources are available to the Offerors to satisfy full acceptance of the Offers.
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CONDITIONS OF THE H SHARE OFFER
The H Share Offer is subject to the fulfilment or waiver, as applicable, of the following conditions:
the passing by the Independent H Shareholders at the H Share Class Meeting to be convened for this purpose of a resolution approving the Delisting, provided that:
such approval is given by at least 75% of the votes attaching to the H Shares held by the Independent H Shareholders that are cast either in person or by proxy; and
the number of votes cast, by way of poll, against the resolution is not more than 10% of the votes attaching to all the H Shares held by the Independent H Shareholders;
the passing by the Independent Domestic Shareholders at the Domestic Share Class Meeting to be convened for this purpose of a resolution approving the Delisting, provided that:
such approval is given by at least 75% of the votes attaching to the Domestic Shares held by the Independent Domestic Shareholders that are cast either in person or by proxy; and
the number of votes cast, by way of poll, against the resolution is not more than 10% of the votes attaching to all the Domestic Shares held by the Independent Domestic Shareholders;
the passing by the Independent Shareholders at the EGM to be convened for this purpose of a resolution approving the Delisting, provided that:
such approval is given by at least 75% of the votes attaching to the Shares held by the Independent Shareholders that are cast either in person or by proxy; and
the number of votes cast, by way of poll, against the resolution is not more than 10% of the votes attaching to all the Shares held by the Independent Shareholders;
all necessary authorizations, consents and approvals (including approval in-principle) of any government or governmental or regulatory body or court or institution in relation to the Proposal including the H Share Offer and the implementation thereof having been obtained pursuant to the provisions of any laws or regulations in Hong Kong, the PRC and other relevant jurisdictions;
all necessary third party consents in relation to the Proposal including the H Share Offer, pursuant to any agreement to which any of the Company or any of its subsidiaries is a party, where any failure to obtain such consent would have a material adverse effect on the business of the Company and its subsidiaries taken as a whole, having been obtained or waived by the relevant party(ies);
all of the authorizations, consents and approvals obtained pursuant to paragraphs (d) and (e) above remaining in full force and effect and not having been revoked or rescinded;
no relevant government, governmental, quasi-governmental, statutory or regulatory body, court or agency having granted any order or made any decision that would make the Proposal or the H Share Offer void, unenforceable or illegal, or restrict or prohibit the implementation of, or impose any additional material conditions or obligations with respect to, the Proposal or the H Share Offer or otherwise having a material adverse effect on the legal ability of the Offerors to proceed with or consummate the Proposal or the H Share Offer; and
there having occurred no change, fact, event or circumstance which has had or would reasonably be expected to have a material adverse effect on the business, financial position, operations or prospects of the Company and its subsidiaries taken as a whole.
The conditions set out in paragraphs (a) to (g) are incapable of being waived. The Offerors may waive the condition set out in paragraph (h). As advised by the PRC lawyers to Wumei Holdings, no PRC regulatory approval is required for the making of the H Share Offer by the Offerors. However, the implementation of the H Share Offer, in particular with respect to the payment of consideration using onshore funds, requires filing with the PRC authorities, which have been duly made. The H Share Offer will be made in compliance with the Takeovers Code, which is administered by the Executive.
The H Share Offer will initially be open for acceptances for at least 21 days from the date that the Composite Document is posted. Once all of the H Share Offer Conditions have been either fulfilled, or, if permitted, waived by the Offerors, the H Share Offer will be declared unconditional and the H Share Offer will be extended for a subsequent period of at least 28 calendar days with at least 14 days' notice in writing given before the H Share Offer is closed by the Offerors in order to allow sufficient time for those H Shareholders who have not accepted the H Share Offer to process the transfer of their Shares.
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CONDITIONS OF THE DOMESTIC SHARE OFFER
The Domestic Share Offer is subject to the fulfilment or waiver, as applicable, of the following conditions:
the H Share Offer becoming unconditional in all respects;
all necessary authorizations, consents and approvals (including approval in-principle) of any governmental or regulatory body or court or institution in relation to the Domestic Share Offer (including the implementation thereof) having been obtained pursuant to the provisions of any laws or regulations in Hong Kong, the PRC and other relevant jurisdictions;
all necessary third party consents in relation to the Domestic Share Offer, pursuant to any agreement to which any of the Company or any of its subsidiaries is a party, where any failure to obtain such consent would have a material adverse effect on the business of the Company and its subsidiaries taken as a whole, having been obtained or waived by the relevant party(ies);
all of the authorizations, consents and approvals obtained pursuant to paragraphs (b) and (c) above remaining in full force and effect and not having been revoked or rescinded;
no relevant government, governmental, quasi-governmental, statutory or regulatory body, court or agency having granted any order or made any decision that would make the Domestic Share Offer void, unenforceable or illegal, or restrict or prohibit the implementation of, or impose any additional material conditions or obligations with respect to, the Domestic Share Offer or otherwise having a material adverse effect on the legal ability of Wumei Holdings to proceed with or consummate the Domestic Share Offer; and
there having occurred no change, fact, event or circumstance which has had or would reasonably be expected to have a material adverse effect on the business, financial position, operations or prospects of the Company and its subsidiaries taken as a whole.
The conditions set out in paragraphs (a) to (e) are incapable of being waived. Wumei Holdings may waive the condition set out in paragraph (f). As advised by the PRC lawyers to Wumei Holdings, no PRC regulatory approval is required for the making and implementation of the Domestic Share Offer by Wumei Holdings. Given that the Domestic Share Offer and the H Share Offer are not inter-conditional, the Offerors have applied to the Executive for a waiver from the requirements under Note 3 to Rule 14 of the Takeovers Code.
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NO RIGHT OF COMPULSORY ACQUISITION
The Offerors have no rights under the laws of the PRC and the Articles of Association of the Company to compulsorily acquire the H Shares that are not tendered for acceptance pursuant to the H Share Offer. Accordingly, the Independent H Shareholders are reminded that if they do not accept the H Share Offer and the H Share Offer subsequently becomes unconditional in all respects, and the H Shares are delisted from the Stock Exchange or any other exchange, this will result in the Independent H Shareholders holding securities that are not listed on the Stock Exchange and the Company no longer subject to the requirements under the Listing Rules. In addition, the Company may or may not continue to be subject to the Takeovers Code after the completion of the Offers depending on whether it remains as a public company thereafter.
The Offerors will apply to the Executive for a waiver from the requirements under Rule 2.2(c) of the Takeovers Code, which requires a resolution to approve a delisting to be made subject to the relevant offeror(s) being entitled to exercise, and exercising, its rights of compulsory acquisition. -
GENERAL INFORMATION
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Shareholding structure of the Company
As at the date of this joint announcement, the Offerors and their concert parties are interested in 707,142,200 Domestic Shares and 1,421,425 H Shares, representing in aggregate approximately 55.03% of the Shares, made up of approximately 94.16% of the total issued Domestic Shares and approximately 0.26% of the total issued H Shares. As at the date of this joint announcement, the Company does not have in issue any other outstanding convertible securities, options, warrants or derivatives in issue which confer any right to subscribe for, convert or exchange into Domestic Shares or H Shares and/or rights over the Domestic Shares or H Shares in issue.
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Independent committee of the board of the Company
Pursuant to Rule 2.1 of the Takeovers Code, an independent committee of the board of the Company has been established to make recommendations to the Independent Shareholders as to whether the terms of the Offers are, or are not, fair and reasonable and as to acceptances and whether the Delisting is, or is not fair and reasonable and as to voting. The independent committee of the board of the Company comprises the non- executive Director, Dr. Meng Jin-xian, the independent non-executive Directors, namely, Mr. Li Lu-an, Mr. Lu Jiang and Mr. Wang Jun-yan, each of whom has no direct or indirect interest in the Offers and the Delisting.
An independent financial adviser will be appointed, subject to the approval of the independent committee of the board of the Company, to advise the independent committee of the board of the Company as to whether the terms of the Offers are, or are not, fair and reasonable and as to acceptances and whether the Delisting is, or is not fair and reasonable and as to voting. A separate announcement will be made by the Company as soon as possible after the independent financial adviser has been appointed.
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Reasons for and benefits of the Offers
The Group's principal activity is the operation of superstores and minimarts in the PRC. In recent years, the Group's profitability has been adversely affected by increasing labour and rental costs and competition from both online and offline operators. In the first half of 2015, despite the Group's turnover having increased by approximately 11.4%, profit attributable to Shareholders decreased by approximately 19.5%, by comparison with the first half of 2014. The Offerors believe that the Group's profitability will continue to face downward pressure from the prevailing weak operating environment, which is expected to remain challenging due in part to the slowing economic growth and the declining trend of retail sales in the PRC. The industry as a whole is undergoing consolidation and the Group needs to take determined measures to continue to consolidate its market position so as to be able to promptly and effectively react to and overcome such challenges on a sustainable basis. New expansion and mergers and acquisitions will result in increase in costs and dilution of profits, and a longer period may be required for investments to be recovered when market growth slows down as a whole. As a publicly listed company, investors would have different requirements with regard to their return on investment, and may urge the Company to consider expansion opportunities more cautiously. For instance, a sizeable acquisition and merger may be of strategic importance, but it may also significantly dilute profitability, on a per Share basis, for a relatively long period of time, especially when equity financing is being employed. Nevertheless, the Company would still require expansion of its businesses to generate synergy and to balance the Group's profitability and development scale. The Proposal, if successful, will not only enable the Company to have greater flexibility to make timely investment decisions, but also minimize the adverse effects on Shareholders' return on investment.
For H Shareholders, the Offerors believe that the H Share Offer provides a compelling opportunity to dispose of their H Shares, for the following reasons:
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Satisfactory return; the offer price under the H Share Offer represents four times the offer price of the H Shares at the initial public offering given the Shares underwent a 1-into-4 share split in 2006;
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Premium valuation; H Shareholders receive cash at a price significantly above the prevailing market price as set out in the sub-section headed '2.2 Comparisons of value'; and
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Certain and immediate value; considering the limited trading volume in the H Shares, the H Share Offer represents an opportunity for H Shareholders to exit their investment for cash proceeds.
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Satisfactory return; the offer price under the H Share Offer represents four times the offer price of the H Shares at the initial public offering given the Shares underwent a 1-into-4 share split in 2006;
- General matters relating to the H Share Offer
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WITHDRAWAL OF LISTING OF THE H SHARES
Upon the H Share Offer becoming unconditional, the Company will make an application for the Delisting in accordance with Rule 6.12 of the Listing Rules. The Shareholders will be notified by way of an announcement of the dates for the last day for dealing in the H Shares and on which the Delisting will become effective.
- RESUMPTION OF TRADING IN THE H SHARES
Availability of the H Share Offer
The Offerors intend to make available the H Share Offer to all H Shareholders, including those who are resident outside Hong Kong, to the extent practicable.
In the event that the despatch of the Composite Document to overseas H Shareholders is prohibited by any relevant law or may only be effected after compliance with conditions or requirements that are unduly burdensome, subject to the Executive's consent, the Composite Document will not be despatched to such overseas Shareholders. The Offerors will apply for such waivers as may be required by the Executive pursuant to Note 3 to Rule 8 of the Takeovers Code at such time.
Composite Document
The Composite Document for the H Share Offer will contain details of, among other things, the Offers, the expected timetable relating to the H Share Offer, the recommendations of the independent committee of the board of the Company in respect of the Offers, the letter of advice from the independent financial adviser in respect of the Offers, as well as other particulars required by the Takeovers Code and will be despatched to the H Shareholders within 21 days from the date of this joint announcement or such later date to which the Executive may consent.
Meetings
The H Share Class Meeting will be convened for the purpose of passing a resolution by way of poll to approve the Delisting by the Independent H Shareholders, and such approval must be given by at least 75% of the votes attaching to the H Shares held by the Independent H Shareholders that are cast either in person or by proxy; and the number of votes cast against the resolution is not more than 10% of the votes attaching to all of the H Shares held by the Independent H Shareholders. The Offerors and their respective concert parties are required to abstain from voting at the H Share Class Meeting.
The Domestic Share Class Meeting will be convened for the purpose of passing a resolution by way of poll to approve the Delisting by the Independent Domestic Shareholders, and such approval must be given by at least 75% of the votes attaching to the Domestic Shares held by the Independent Domestic Shareholders that are cast either in person or by proxy; and the number of votes cast against the resolution is not more than 10% of the votes attaching to all of the Domestic Shares held by the Independent Domestic Shareholders. The Offerors and their respective concert parties are required to abstain from voting at the Domestic Share Class Meeting.
Furthermore, pursuant to Rule 2.2 of the Takeovers Code, the EGM will be convened for the purpose of passing a resolution by way of poll to approve the Delisting by the Independent Shareholders, and such approval must be given by at least 75% of the votes attaching to the Shares held by the Independent Shareholders that are cast either in person or by proxy, and the number of votes cast against the resolution shall be no more than 10% of the votes attaching to all Shares held by the Independent Shareholders. The Offerors and their respective concert parties are required to abstain from voting at the EGM.
The Shares beneficially owned by the Offerors and the parties acting in concert with them, will not, in compliance with the Takeovers Code, be voted at the H Share Class Meeting, the Domestic Share Class Meeting and/or the EGM.
Notices of the H Share Class Meeting, the Domestic Share Class Meeting and the EGM will be sent to the Shareholders together with the Composite Document.
Notice to the holders of H Shares in the United States
The H Share Offer is subject to Hong Kong disclosure and procedural requirements, including with respect to offer timetable, settlement procedures, timing of payments and withdrawal rights, which are different from those applicable to tender offers carried out in the United States. In the absence of a relevant exemption under the laws of the United States, the H Share Offer may not be available to persons who are in the United States. Even where an exemption is available, persons in the United States are urged, before accepting the H Share Offer, to consult their own professional advisers regarding the tax consequences of acceptance of the H Share Offer, whether in relation to United States federal income tax or taxes under applicable state and local tax laws, or foreign tax laws.
The financial information of the Company has been extracted from the audited financial statements of the Company for the years ended 31 December 2014 and the unaudited financial statements of the six months ended 30 June 2015, which have been prepared in accordance with the Hong Kong Financial Reporting Standards, which may not be wholly comparable to financial information of United States companies or companies whose financial statements are solely prepared in accordance with generally accepted accounting principles in the United States.
The Company is incorporated under the laws of the People's Republic of China. It may be difficult for holders of H Shares in the United States to enforce their rights and claims arising out of United States federal securities laws, since the Company is located in a country other than the United States, some or all of its officers and directors may be residents of a country other than the United States and the assets of the Company may be located outside the United States. Holders of H Shares in the United States may not be able to sue a non-United States company or its officers or directors in a non-United States court for violations of United States securities laws. It may be difficult for such
holders of H Shares to effect service of process within the United States upon the Company or its officers or directors or to enforce against them any judgment of a United States court predicated upon the federal or state securities laws of the United States. In particular holders of H Shares in the United States should note that the Offerors reserve the right themselves or through affiliates or nominees or their brokers acting as agents from time to time making purchases of, or arrangements to purchase H Shares outside of the United States whether in open market or by private transaction during the offer period of the H Share Offer other than pursuant to the H Share Offer to the extent permitted by and in accordance with the requirements of the Takeovers Code. Information about such purchases will be reported to the SFC in accordance with the requirements of the Takeovers Code and will be available on the website of the SFC at http://www.sfc.hk/.
INTRODUCTION
On 5 October 2015, the Board received a notification from Wumei Holdings, the controlling shareholder of the Company, that voluntary conditional offers are being contemplated by Wumei Holdings and its wholly owned indirect subsidiary Wumei Hong Kong, for the H Shares and the Domestic Shares other than those owned, controlled or agreed to be acquired by the Offerors and parties acting in concert with any of them in accordance with the Takeovers Code which, if implemented, will result in the Delisting.
Such Proposal is subject to a number of conditions as set out in this joint announcement, including the approval of the Delisting by Independent H Shareholders at the H Share Class Meeting, by Independent Domestic Shareholders at the Domestic Share Class Meeting and by Independent Shareholders at the EGM, in each case voting by way of a poll. In particular, the H Share Offer will only become unconditional if and when the H Share Offer Conditions have been satisfied or as the case may be waived. Accordingly, all references in this joint announcement to the Offers are references to the Offers that will become unconditional only if and when such conditions have been satisfied or as the case may be waived. Shareholders and/or potential investors should therefore exercise caution when dealing in the Shares.
THE OFFERS
Consideration for the Offers
Under the Proposal, Offers will be made by the Offerors or on their behalf in accordance with the provisions of the Takeovers Code on the following basis:
For each H Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$6.22 in cash
For each Domestic Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . RMB5.07 in cash*
* equivalent of the H Share offer price in RMB.
The Offerors will not increase the consideration for the Offers as set out above.
Comparisons of value
The cash offer price offered under the Offers represents:
a premium of approximately 90.21% over HK$3.27 which is the closing price per H Share as quoted on the Stock Exchange on the Last Trading Date;
a premium of approximately 94.98% over HK$3.19 which is the volume weighted average closing price per H Share as quoted on the Stock Exchange for the one week up to and including the Last Trading Date;
a premium of approximately 78.74% over HK$3.48 which is the volume weighted average closing price per H Share as quoted on the Stock Exchange for the one month up to and including the Last Trading Date;
a premium of approximately 52.08% over HK$4.09 which is the volume weighted average closing price per H Share as quoted on the Stock Exchange for the three months up to and including the Last Trading Date;
a premium of approximately 21.48% over HK$5.12 which is the volume weighted average closing price per H Share as quoted on the Stock Exchange for the six months up to and including the Last Trading Date;
a premium of approximately 95.60% over HK$3.18 which is the average closing price per H Share as quoted on the Stock Exchange for the one week up to and including the Last Trading Date;
a premium of approximately 77.71% over HK$3.50 which is the average closing price per H Share as quoted on the Stock Exchange for the one month up to and including the Last Trading Date;
a premium of approximately 48.10% over HK$4.20 which is the average closing price per H Share as quoted on the Stock Exchange for the three months up to and including the Last Trading Date;
a premium of approximately 18.03% over HK$5.27 which is the average closing price per H Share as quoted on the Stock Exchange for the six months up to and including the Last Trading Date; and
a premium of approximately 61.98% over RMB3.13 which is the unaudited consolidated net asset value of each Share as at 30 June 2015.
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