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Merger Arbitrage Mondays – Multiple Deals Face Regulatory Hurdles

  • December 26, 2022

Heading into the end of the year, merger activity decreased significantly last week with three new deals announced, and two deals completed. One of the three deals announced was a potential deal in the works. All three new deals were small with deal sizes below $100 million.

China Index Holdings Limited (CIH)

China Index Holdings operates a real estate information and analytics service platform in China. We added CIH as a potential deal in the works on August 23, 2022, when Fang Holdings Limited, a real estate internet portal in China, submitted to the board of directors of China Index Holdings Limited, a preliminary non-binding proposal to acquire CIH for US$0.84 per share. The company’s closing price before this announcement was $0.70.

On October 13, 2022, CIH received a revised preliminary non-binding proposal letter from a consortium that included Fang Holdings for a purchase price of US$0.84 in cash. The revised proposal updated the previously announced preliminary non-binding proposal letter submitted by Fang to CIH, stating that the members of the consortium had agreed to work exclusively with each other in pursuing the proposed transaction and that the consortium owned in aggregate approximately 61.0% of all the issued and outstanding Class A Shares and approximately 100% of all the issued and outstanding Class B Shares, which in aggregate represented approximately 91.4% of the total voting power of the company.

The deal was finalized on December 22, 2022. China Index Holdings Limited entered into an agreement and plan of merger with CIH Holdings Limited and CIH Merger Sub Holdings Limited, in a ‘going-private’ transaction, under which CIH shareholders will receive US$1.0 in cash per share without interest and net of any applicable withholding tax. The deal is expected to be completed in the first quarter of 2023.

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