Jinke Smart (9666 HK): Boyu Returns To The Well?

• Back on the 27th September 2022, Boyu Group launched a HK$12/share VGO for PRC-incorporated property management play Jinke Smart Services (9666 HK), a 33.04% premium to last close.

• Boyu and concert parties held 53.05%, and the Offer was contingent on regulatory approvals and 7.71% of shares out tendering. 4.79% tendered. Boyu also acquired 7.15% in the market.

• Two days after announcing very ordinary FY24 results, Jinke shares were suspended pursuant to the Takeovers Code. Presumably Boyu is on the acquisition path again. Another VGO or a privatisation?

Shares in Jinke are currently suspended, so there is nothing to be done. Yet.

Jinke is also illiquid.

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Recap Of The 2022 Offer

• The Offer Price. Boyu offered Jinke Smart Services (9666 HK)'s shareholders $12/share.

  • The cancelation price was not declared final.

• Dividends. Shares would be acquired with any dividends to be paid attached.

• Boyu? At the time of the September Offer announcement, Boyu Group held 22.69%, which increased to 29.84% after it bought 7.15% in the market.

  • There were two SFC disclosure notices from Boyu (via Thematic Bridge) buying shares in the market) - here and here.

  • My understanding of the Code was that if Boyu bought >30% in the market, it would trigger an MGO. And that should be an unconditional MGO - given concert parties had >50%.

• The Concert Parties. Jinke Property Group (000656 CH) held 30.34%. Together with Huang Hongyun, Jinke's founder, Boyu + concert parties held 53.05%. Before Boyu bought in the market.

  • The Offer appeared geared to bring Boyu's stake in line with Jinke Property's.

  • But that all got muddied after Boyu acquired shares in the market.

• The tendering condition. 50.359mn shares or 7.71% of shares out tendering, such that Boyu would hold 30.4%.

  • This condition could be waived. And it was.

• Listing intention. Boyu intended to maintain Jinke's listing.

  • Jinke is PRC-incorporated. No matter how many shares were to tender, compulsory acquisition would not be afforded.

  • Jinke's permitted free float was/is 23.4% which must be restored/maintained at the close of an Offer.

• Regulatory approvals. SAMR reviewed the 2022 deal as a simple case - see here.

  • Antitrust clearance was secured on the 8th November 2022.

  • Although the concert parties held >50%, this was a VGO, therefore the Offer was not unconditional once the regulatory approvals were satisfied.

• Offer declared unconditional. Nevertheless, Boyu declared the Offer unconditional on the 8th November after waiving the acceptance condition.

  • The offer closed on the 22 November 2022, with 4.79% of shares out tendering.

  • The free float was 35.02%.

  • Below was the shareholder register at the close of the Offer: