BEIJING, Jan. 6, 2016 /PRNewswire/ -- Jiangsu Sanyou Group Co Ltd (SZSE: 002044) today announces that it has updated its business license to change the company name to Meinian Onehealth Healthcare Holding Co., Ltd and that the consortium of which it is a member ("the Consortium" or "We") has submitted a further revised and improved proposal (the "Improved Proposal") to acquire iKang Healthcare Group, Inc. (NASDAQ: KANG, "iKang"). The Improved Proposal was submitted to iKang's Special Committee of the Board of Directors (the "Special Committee") and details the transaction structure as well as the Consortium's ability to swiftly complete the transaction. At the same time, the Consortium admitted three new members, Shanghai YuanXing YinShi Equity Investment Limited Partnership (GGV Capital), Shanghai Sailing Capital Management Co., Ltd., and Haitong Auspicate Capital Management Co., Ltd.
The Improved Proposal increases the offer to US$25 per ADS or US$50 per share in cash to acquire 100% of the outstanding Shares (including Shares represented by ADSs) of iKang. The improved offer price represents a premium of approximately 55.6% to the unaffected closing price on August 28, 2015, the last trading day before iKang publicly announced receipt of the proposal submitted by Mr. Zhang Ligang and his buyer group ("Mr. Zhang's Buyer Group"), and a premium of approximately 40.4% to Mr. Zhang's proposal. The improved offer price is also US$3 higher per share than the US$47 per share offered by the Consortium in its first revised proposal submitted on December 14, 2015. The Consortium is determined to pursue this transaction and should Mr. Zhang's Buyer Group wish to engage in a competing transaction, the Consortium would be willing to consider a revised offer that reflects market conditions.
The Improved Proposal lays out a clear and feasible transaction structure that enables the shareholders who are unaffiliated with Mr. Zhang and his Buyer Group ("Unaffiliated Shareholders") to independently evaluate the offer. Should the Consortium's proposal be accepted by the Unaffiliated Shareholders, the Unaffiliated Shareholders would quickly receive the share value in cash, regardless of whether Mr. Zhang Ligang accepts it. While the Consortium believes that it can successfully complete the acquisition on the terms set forth in the merger agreement and the Improved Proposal, the Consortium continues to be open-minded and flexible with respect to the potential structure of the acquisition. The Consortium remains committed to working with the Special Committee and other parties including Mr. Zhang Ligang and other major iKang shareholders in order to complete the transaction in a manner that would deliver the maximum value to iKang's shareholders.
The Improved Proposal would allow faster completion of the transaction than the proposal submitted by Mr. Zhang's Buyer Group. The Consortium's proposed acquisition will not be subject to any regulatory closing conditions, whereas the proposal submitted by Mr. Zhang's Buyer Group would likely be subject to U.S. Securities and Exchange Commission review under Rule 13e-3. Furthermore, the Consortium's offer is not subject to any financing considerations as every Consortium member has access to the capital needed to provide funding, while Mr. Zhang's Buyer Group would rely upon debt financing.
Yu Rong, Chairman of Meinian, said: "We remain committed to acquiring iKang and firmly believe that our proposal is superior in every respect, offering greater shareholder value, fewer uncertainties, and an accelerated timetable. We hope the Special Committee will act in the best interests of all iKang's shareholders by accepting what we believe is a compelling offer. We see tremendous growth potential in China's preventive health industry, and believe that industry consolidation will help accelerate its development."
About Jiangsu Sanyou (Meinian Onehealth Healthcare Holding Co., Ltd)
Meinian Onehealth Healthcare Holding Co., Ltd ("Meinian") was founded in 2004. It is China's leading preventive healthcare service provider, with more than 130 self-owned medical examination centers in more than 80 core cities. In 2015, Meinian provided its services to almost ten million customers. The development of Meinian is built on the size of its customer base, the accuracy of its data, and the standardised medical service it provides across China. Leveraging its professional medical examination services and health risk evaluation, Meinian also provides high quality healthcare management services, including preventive healthcare and wellness maintenance, to its corporate and individual customers. On August 2015, Meinian became an A-share listed company (SZ: 002044). It is due to complete a merger with another leading Chinese preventive healthcare service provider, Ciming. Meinian is an influential listed company in the medical service and healthcare sectors in China.
Members of Meinian Consortium
The expanded group of Consortium members includes:
- Meinian Onehealth Healthcare (Group) Co., Ltd
- Cathay Capital Private Equity SAS
- Shenzhen Ping An Decheng Investment Co., Ltd.
- Taiping Guofa (Suzhou) Capital Management Co., Ltd.
- Sequoia China Investment Management LLP
- Huatai Ruilian Fund Management Co., Ltd.
- Shanghai YuanXing YinShi Equity Investment Limited Partnership
- Shanghai Sailing Capital Management Co., Ltd.
- Haitong Auspicate Capital Management Co., Ltd.
About the Three New Consortium Members
Shanghai YuanXing YinShi Equity Investment Limited Partnership is directly managed by GGV Capital, a leading venture capital firm focused on investment in companies that are expanding in the US and China. GGV Capital has over RMB10 billion of assets under management.
Sailing Capital Management Co., Ltd. is the parent company of Sailing Capital International ("Sailing Fund"), a RMB international investment and loan fund. Sailing Fund has capital totalling RMB 50 billion of which RMB 12 billion was raised in the first funding round. In the coming years, Sailing Fund will increase its fund to over RMB 50 billion through a combination of investments and loans, establishing mother and sub-funds and issuing bonds. In 2012, the creation of Sailing Fund was rated as one of the top ten events that propelled Shanghai into an international financial center. In October 2013, Sailing Fund received the Shanghai Financial Innovation Achievement Award and in October 2015, it was placed on China Business News' "Annual PE Finance Value List".
Haitong Auspicate Capital Management Co.,Ltd. is an investment management platform under Haitong Securities, listed on both the Shanghai and Hong Kong Stock Exchanges. Haitong Securities is the second largest securities firm in China in terms of net asset value and was China's "best broker" in 2015. Haitong Auspicate Capital Management Co., Ltd. focuses on equity and start-up investments and primarily invests in emerging industries. Its first fund, Haitong Xingtai Emerging Industries Investment Fund, has total assets under management of RMB 5 billion. The company's funds invest in the healthcare, culture and TMT industries through equity and bonds.
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Proposal submitted by Mr. Zhang's Buyer Group: On August 31, 2015, Mr. Zhang Ligang, the founder, Chairman and Chief Executive Officer of iKang and other affiliated entities, and FV Investment Holdings, submitted a preliminary non-binding proposal to acquire all outstanding Class A Shares and ADSs not already owned by them for US$17.8 in cash per ADS.
January 6, 2016
The Special Committee of the Board of Directors (the "Special Committee") iKang Healthcare Group, Inc. B-6F, Shimao Tower 92A Jianguo Road Chaoyang District, Beijing 100022 People's Republic of China
Dear members of the Special Committee:
We are pleased that the Special Committee has indicated its willingness to engage in dialogue with us and give due and proper consideration to our proposal to acquire all of the outstanding Class A common shares ("Class A Shares"), Class C common Shares ("Class C Shares", together with Class A Shares, the "Shares") and American Depositary Shares ("ADSs") (each representing ½ Class A Share) of iKang Healthcare Group, Inc. ("iKang" or "Company") in an all-cash transaction (the "Acquisition"). As further outlined in this letter, we are prepared to increase our proposed offer price in respect of the Acquisition to US$25 per ADS or US$50 per Share, in cash, subject to the terms of this letter and the Merger Agreement (as defined below). In addition, on January 5, 2016, we admitted three new members into our consortium, Shanghai YuanXing YinShi Equity Investment Limited Partnership, Shanghai Sailing Capital Management Co., Ltd., and Haitong Auspicate Capital Management Co., Ltd. We remain resolute in our objective to acquire iKang and are prepared to discuss in good faith with the Special Committee and its advisors in order to enter into the Merger Agreement promptly.
We believe that our proposal (as hereby revised and improved) is eminently sensible and demonstrates our determination and ability to expeditiously implement a transaction which will deliver significantly higher value for iKang's shareholders than the announced US$17.8 per ADS "going private" proposal from a consortium of investors led by Mr. Ligang Zhang, chairman and CEO of the Company ("Mr. Zhang", and his proposal, "Insider Proposal").
We would like to take this opportunity to convey to the Special Committee and iKang's shareholders a clearer view of our proposal and why you should have full confidence in our ability to deliver superior deal with certainty, faster execution and higher value to iKang and its shareholders who are unaffiliated with Mr. Zhang and his buyer group ("Unaffiliated Shareholders") than the Insider Proposal.
- Superior Offer Price: Our further improved offer price of US$25 per ADS or US$50 per Share represents a premium of approximately 40.4% to the Insider Proposal.
- Transaction Structure: As the Unaffiliated Shareholders own Shares (including Shares represented by ADSs) representing more than 64% of the Company's outstanding voting power, we are prepared to structure our Acquisition as a two-step merger to allow the Unaffiliated Shareholders to make their own decision and, if they so choose, promptly receive enhanced share value in cash regardless of Mr. Zhang's position with respect to our Acquisition. While we believe that we can successfully implement our Acquisition on the basis set forth in this letter and the Merger Agreement, we continue to be open-minded and flexible with respect to the potential structure of the Acquisition, and remain committed to working with the Special Committee as well as other parties including Mr. Zhang and other large shareholders of iKang in order to implement the Acquisition in a manner which would deliver the maximum value to the Company's shareholders.
We are prepared to enter into a merger agreement in substantially the form our advisors delivered to the Special Committee's advisors on December 21, 2015 (as the same may be modified or amended to reflect the terms of this letter and any other terms mutually agreeable to us and the Special Committee, the "Merger Agreement") pursuant to which we would agree to commence an offer (the "Offer") to acquire all of the outstanding Shares of iKang for US$25 per ADS or US$50 per Share, in cash, as soon as practicable after the parties enter into the Merger Agreement. The Offer will be conditioned only upon:
- the Rights (as defined in the Rights Agreement, dated as of December 2, 2015, between iKang and American Stock Transfer & Trust Company, L.L.C. (the "Rights Agreement")) issued under the Rights Agreement are made inapplicable to the Offer, including any potential "second-step" transaction (such as those described below), or the Rights having been redeemed by the Special Committee or the Board of Directors of iKang;
- the tender of the Shares representing more than 50% of the voting power (on a fully diluted basis); and
- no order or injunction which has the effect of making illegal or otherwise prohibiting the consummation of the Offer.
In the event that Mr. Zhang and persons affiliated with him tender the Shares owned by them in the Offer and the Offer results in the tender of more than 66.7% (in voting power) of the outstanding Shares of the Company, we would commit to merge iKang with an acquisition vehicle to be formed by us (the "Merger") at the same merger consideration as presented by our Offer. In the event that Mr. Zhang and persons affiliated with him choose not to tender Shares owned by them, we are nonetheless prepared to convene a shareholders meeting to let shareholders decide whether they would approve the Merger. Should the Merger fail to consummate because of Mr. Zhang's opposition, we, as the then controlling shareholder of the Company, will cause the Company to take actions to cash out all the Unaffiliated Shareholders at the same price as the Offer so that all Unaffiliated Shareholders will receive immediate cash payment without being penalized for their failure to tender their Shares in the Offer. Thereafter, we intend to operate iKang as a private company with Mr. Zhang and persons affiliated with him being minority shareholders.
- Timing: We believe that we would be able to complete the Offer promptly following the signing of the Merger Agreement (assuming satisfaction or waiver at such time of all of the conditions to the Offer set forth in the Merger Agreement and the relevant materials related to the Offer). Compared with any potential transaction involving Mr. Zhang, which inevitably will be a "going private transaction" that would be subject to the SEC's Rule 13e-3 review, our Acquisition, particularly our Offer, can be closed much more expeditiously.
- No Regulatory Conditions: The consummation of the Acquisition will not be conditioned on any regulatory closing conditions.
- No Financing Condition: Neither our offer nor the Merger Agreement is subject to any financing condition. Our consortium is comprised of Sanyou Group Co., Ltd., a Chinese A-Share listed company, and various reputable financial institutions and private equity funds, including Cathay Capital Private Equity SAS, Shenzhen Ping An Decheng Investment Co., Ltd., Taiping Guofa (Suzhou) Capital Management Co., Ltd., Sequoia China Investment Management LLP, Huatai Ruilian Fund Management Co., Ltd., Shanghai YuanXing YinShi Equity Investment Limited Partnership, Shanghai Sailing Capital Management Co., Ltd., and Haitong Auspicate Capital Management Co., Ltd. Each of us has a strong balance sheet or access to capital to provide the required funding internally and has agreed to provide definitive equity commitments, subject to terms and conditions set forth therein, when iKang agrees to enter into the Merger Agreement.
- Reverse Break-up Fee: To further demonstrate our confidence in being able to timely consummate the Acquisition, we can agree to a reverse break-up fee in line with market terms for comparable transactions (including transaction value), payable to iKang as provided in the Merger Agreement.
We strongly believe that our proposal is compelling and superior to the Insider Proposal, including in terms of a substantially higher price and faster time to completion, and we hope to negotiate in good faith with the Special Committee and its advisors in order to enter into the Merger Agreement as soon as possible.
As a company listed on the Shenzhen Stock Exchange, Jiangsu Sanyou may be under certain legal obligations to disclose this letter and we understand that in turn, iKang may then wish to make a public announcement with respect to the receipt of our letter.
This letter is not a binding offer, agreement or agreement to make a binding offer of agreement at any point in the future and does not contain all matters upon which agreement must be reached in order to consummate the Acquisition. The parties will be bound only upon the execution of mutually agreeable Merger Agreement or such other definitive documentation as may be agreed by them from time to time.
We look forward to receiving your response and working expeditiously with you towards the completion of a successful Acquisition. Our legal counsel, Mr. Ke Geng of O'Melveny & Myers LLP and Mr. Peter Huang of Skadden, Arps, Slate, Meagher & Flom LLP, are available at your convenience to discuss any aspect of our offer.
Jiangsu Sanyou Group Co., Ltd. Cathay Capital Private Equity SAS Shenzhen Ping An Decheng Investment Co., Ltd. Taiping Guofa (Suzhou) Capital Management Co., Ltd. Sequoia China Investment Management LLP Huatai Ruilian Fund Management Co., Ltd. Shanghai YuanXing YinShi Equity Investment Limited Partnership Shanghai Sailing Capital Management Co., Ltd. Haitong Auspicate Capital Management Co., Ltd.
SOURCE Meinian Onehealth Healthcare