Best Grace withdraws offer to buy Delong as bid wasn’t compliant with takeover code

Best Grace Holdings has withdrawn its offer to buy all of Delong Holdings as its bid would need to be raised to be compliant with Singapore’s takeover code, it said in a filing to SGX after the market close on Thursday.

Delong Holdings’ CEO and Executive Chairman Ding Liguo had made the takeover bid in late September via special purpose vehicle Best Grace Holdings, offering S$7.00 a share for all of the company’s shares. The offer price was a 8.0 percent premium over the volume weighted average price of the stock for the previous month, the filing had said.

But Singapore’s takeover code requires that the offer price must not be less than the highest price paid by the offeror for shares either during the offer period or within six months before the offer begins.

To be compliant with the code, under Rule 17.1, the offer price would need to be raised to S$7.42 a share, the filing on Thursday said.

Under the terms of the now-scuttled deal, Best Grace would have acquired the around 75.56 percent Delong stake held by Best Decade Holdings, which is indirectly wholly owned by Ding Liguo and his wife, Zhao Jing. On 1 June, Best Decade Holdings bought a total 17.33 percent Delong stake from EVRAZ Group and Vollin Holdings, according to a filing to SGX at the time.

“The offeror ensured that it had sufficient financial resources available to satisfy in full all acceptances of the offer for the offer shares in cash on the basis of the offer price of S$7.00/share,” the filing on Thursday said. But it added, “The revision will also precipitate very substantial contingent liabilities that materially exceed the financial resources arranged for the offer.”

The filing said the offeror remained “supportive of further initiatives,” but that it emphasized there was no certainty or assurance of any transaction.

On 5 October, Delong had requested a mandatory suspension of its shares, with the company saying it would work with the offeror on an announcement.

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