Funtalk is being acquired:
Funtalk China Holdings Limited Enters Into Definitive Agreement With Fortress Group Limited and Fortress Merger Sub Limited for Going Private Transaction
Press Release Source: Funtalk China Holdings Limited On Tuesday May 31, 2011, 8:30 am EDT
HONG KONG, May 31, 2011 /PRNewswire-Asia/ -- Funtalk China Holdings Limited (the "Company" or "Funtalk") (Nasdaq:FTLK - News), a leading China-based retailer and wholesale distributor of wireless communications devices, accessories and content, announced today that it has entered into a definitive agreement with Fortress Group Limited ("Parent") and Fortress Merger Sub Limited ("Merger Sub") pursuant to which Parent will acquire Funtalk for US$7.20 per share (the "Transaction"). The Transaction values Funtalk's equity at approximately US$443 million on a fully diluted basis, and represents a 35.9% premium over the Company's 30 trading day average price as quoted by NASDAQ on March 24, 2011, the last trading day prior to the Company's announcement on March 25, 2011 that it had received a "going private" proposal.
Parent is a newly-formed entity jointly owned by ARCH Digital Holdings Ltd. ("ARCH"), Capital Ally Investments Limited ("Capital Ally"), GM Investment Company Limited ("GM"), Sinowill Holdings Limited ("Sinowill"), which is controlled by the chairman of the board of directors of the Company, Mr. Kuo Zhang, Huge Harvest Enterprises Limited ("Harvest"), which is wholly owned and controlled by the chief executive officer of the Company, Mr. Dongping Fei, Kingstate Group Limited ("Kingstate"), which is wholly owned and controlled by Mr. Hengyang Zhou, executive president of Beijing Funtalk Century Technology Group Company Limited, an indirect wholly owned subsidiary of the Company, and Trend Focus Limited, which is wholly owned and controlled by Mr. Francis Kwok Cheong Wan, senior vice president of corporate investor relations of the Company ("Trend Focus", together with ARCH, Capital Ally, GM, Sinowill, Harvest and Kingstate, the "Consortium Members" or the "Consortium"). Merger Sub is a newly-formed exempted company with limited liability incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of Parent. The Consortium Members currently own, in the aggregate, 46,458,314 ordinary shares, or approximately 77.09% of the outstanding shares of the Company (excluding outstanding warrants and options of the Company).
In connection with the Transaction, PAG Asia Capital ("PAGAC"), Parent and the Consortium Members have entered into a subscription agreement pursuant to which PAGAC has agreed to subscribe for equity-linked securities of Parent, subject to certain conditions, the proceeds of which shall be used in part to provide financing for the Transaction.
Under the terms of the agreement, the Company will be the surviving entity in the Transaction as a wholly owned subsidiary of Parent. In the Transaction, each ordinary share of the Company issued and outstanding immediately prior to the effective time of the Transaction will be cancelled in exchange for the right to receive US$7.20 per share in cash without interest, except for the ordinary shares beneficially owned by Parent, Merger Sub, the Consortium Members and any direct or indirect wholly owned subsidiary of the Company which will be cancelled without receiving any consideration.
The Company's Board of Directors, acting upon the unanimous recommendation of the Independent Committee formed by the Board of Directors, approved the definitive agreement and resolved to recommend that the Company's shareholders vote to approve the definitive agreement. The Independent Committee, which is composed solely of directors unrelated to any of Parent, Merger Sub, the Consortium Members or any of the management members of the Company, negotiated the terms of the definitive agreement with the assistance of its financial and legal advisors.
The Transaction, which is currently expected to close before the end of the third quarter 2011, is subject to the approval of the definitive agreement by an affirmative vote of shareholders representing two-thirds or more of the shares present and voting in person or by proxy at a meeting of the Company's shareholders which will be convened to consider the approval of the definitive agreement, as well as certain other customary closing conditions. If completed, the Transaction will result in the Company becoming a privately-held company and its ordinary shares will no longer be listed on the NASDAQ Global Market.
Bank of America Merrill Lynch is serving as financial advisor to the Independent Committee. Skadden, Arps, Slate, Meagher & Flom 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. Latham & Watkins LLP is serving as U.S. legal advisor to the Company. Shearman & Sterling LLP is serving as U.S. legal advisor to Bank of America Merrill Lynch.
Citigroup Global Markets Asia Limited is serving as financial advisor to the Consortium. Cleary Gottlieb Steen & Hamilton LLP is serving as U.S. legal advisor to the Consortium, and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Consortium. Weil, Gotshal & Manges LLP is serving as U.S. legal advisor to Citigroup Global Markets Asia Limited. Simpson Thacher & Bartlett LLP is serving as U.S. legal advisor to PAGAC.
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