Chemspec International Limited Enters Into Merger Agreement With Halogen Limited and Halogen Mergersub Limited

SHANGHAI, March 21, 2011 /PRNewswire-Asia-FirstCall/ -- Chemspec International Limited (NYSE: CPC; "Chemspec" or the "Company", incorporated in the Cayman Islands), a leading China-based contract manufacturer of highly-engineered specialty chemicals, today announced that it has entered into a definitive agreement and plan of merger with Halogen Limited ("Parent"), an entity jointly owned by Dr. Jianhua Yang and an affiliate of Primavera Capital Management Ltd. ("Primavera") and Halogen Mergersub Limited ("Merger Sub"), a Cayman Islands exempted company wholly owned by Parent.  Dr. Jianhua Yang is the Company's Chief Executive Officer and the Chairman of the Company's Board of Directors and beneficially owns approximately 55% of the Company's outstanding ordinary shares.

Under the terms of the merger agreement, each ordinary share of the Company (including shares represented by American Depositary Shares ("ADSs"), each of which represents sixty ordinary shares) issued and outstanding immediately prior to the effective time of the merger will be cancelled in exchange for the right to receive $0.135 (or $8.10 per ADS) in cash without interest, except for the ordinary shares and ordinary shares represented by ADSs beneficially owned by Dr. Jianhua Yang, Mr. Yunlong Yuan and Mr. Weinian Qi which will be cancelled without receiving any consideration.  The offer represents a 28.2% premium over the closing price as quoted by Bloomberg L.P. on November 10, 2010 and a 27.1% premium over the 90-day volume weighted average price as quoted by Bloomberg L.P. on November 10, 2010, the last trading day prior to the Company's announcement on November 11, 2010 that it had received a "going private" proposal.

The Company's Board of Directors, acting upon the unanimous recommendation of the Independent Committee formed by the Board of Directors, approved the merger agreement and resolved to recommend that the Company's shareholders vote to adopt the merger agreement.  The Independent Committee, which is composed solely of directors unrelated to any of Parent, Merger Sub, Primavera or any of the management members of the Company, negotiated the terms of the merger agreement with the assistance of its financial and legal advisors.

The merger contemplated by the merger agreement, which is currently expected to close before the end of the third quarter 2011, is subject to the adoption of the merger agreement by an affirmative vote of shareholders in accordance with Cayman Islands law and an affirmative vote of the majority of the disinterested shareholders of the Company that are present and voting in person or by proxy at a meeting of the Company's shareholders, as well as certain other customary closing conditions.  Dr. Jianhua Yang has agreed to vote to adopt the merger agreement.  Standard Chartered Bank (Hong Kong) Limited ("SCB"), Parent and Merger Sub have entered into a facility agreement pursuant to which SCB has agreed to provide financing for the transaction, subject to certain conditions.  The Company will schedule a meeting of its shareholders for the purpose of voting on the adoption of the merger agreement.  If completed, the merger will, under Cayman Islands laws, result in the Company becoming a privately-held company and its ADSs would no longer be listed on the New York Stock Exchange.

Houlihan Lokey is serving as financial advisor to the Independent Committee.  Shearman & Sterling LLP is serving as U.S. legal advisor to the Independent Committee and Maples and Calder is serving as Cayman Islands legal advisor to the Independent Committee.  Simpson Thacher & Bartlett LLP is serving as U.S. legal advisor to the Company.  Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal advisor to Dr. Jianhua Yang.  Latham & Watkins LLP is serving as U.S. legal advisor to Primavera, and Commerce and Finance Law Offices is serving as PRC legal advisor to Primavera. Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the buyer group. O'Melveny & Myers LLP is serving as U.S. legal advisor to Houlihan Lokey. White & Case is serving as U.S. and Hong Kong legal advisor to SCB, and Walkers is serving as Cayman Islands legal advisor to SCB.

Additional Information about the Transaction

The Company will furnish to the Securities and Exchange Commission (the "SEC") a report on Form 6-K regarding the transaction, which will include the merger agreement and related documents.  All parties desiring details regarding the transaction are urged to review these documents, which are available at the SEC's website (http://www.sec.gov).

In connection with the proposed merger, the Company will prepare and mail a proxy statement to its shareholders.  In addition, certain participants in the proposed transaction will prepare and mail to the Company's shareholders a Schedule 13E-3 transaction statement.  These documents will be filed with or furnished to the SEC.  INVESTORS AND SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE PROPOSED MERGER AND RELATED MATTERS.  In addition to receiving the proxy statement and Schedule 13E-3 transaction statement by mail, shareholders also will be able to obtain these documents, as well as other filings containing information about the Company, the proposed merger and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549.  In addition, these documents can be obtained, without charge, by contacting the Company at the following address and/or phone number:

The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from our shareholders with respect to the proposed merger.  Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in the proxy statement and Schedule 13E-3 transaction statement relating to the proposed merger when it is filed with the SEC.  Additional information regarding the interests of such potential participants will be included in the proxy statement and Schedule 13E-3 transaction statement and the other relevant documents filed with the SEC when they become available.

This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities and it is not a substitute for any proxy statement or other filings that may be made with the SEC should the proposed merger go forward.

About Chemspec

Chemspec is a leading China-based contract manufacturer of highly engineered specialty chemicals as well as fluorinated specialty chemicals.  In manufacturing specialty chemicals, Chemspec also provides process design and process development services, which enable efficient and rapid production of specialty chemicals that are incorporated into the products of Chemspec's end users.  Chemspec's customers and end users include electronics, pharmaceutical and agrochemical companies.  For more information, please visit http://www.chemspec.com.cn.

Safe Harbor Statements

This announcement contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements.  Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.  Further information regarding these and other risks is included in Chemspec's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 and annual reports on Form 20-F, as amended from time to time.  Chemspec does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

SOURCE Chemspec International Limited