iKang Healthcare Group, Inc. (“iKang” or the “Company”)
(Nasdaq:KANG), a major provider in China’s fast growing private
preventive healthcare services market, today announced that it has
entered into a definitive Agreement and Plan of Merger (the “Merger
Agreement”) with IK Healthcare Investment Limited (“Parent”), a
special purpose vehicle wholly-owned by one or more affiliates of
Yunfeng Capital and Alibaba Group Holding Limited (collectively,
the “Sponsors”), and IK Healthcare Merger Limited (“Merger
Sub”), a wholly-owned subsidiary of Parent.
Pursuant to the Merger Agreement, Parent will
acquire the Company (other than the Rollover Shares, as defined
below) for a cash consideration of US$41.20 per Class A common
share (“Class A Shares”) or Class C common share of the Company
(together with the Class A Shares, the “Shares”) or US$20.60 per
American depositary share of the Company (each, an “ADS”), each
representing ½ of a Class A Share. This price represents a 15.0%
premium over the closing price of US$17.92 per ADS as quoted by the
NASDAQ Global Market on March 9, 2018, and a premium of 24.7% and
28.5%, respectively, over the Company’s 30 and 60 trading day
volume-weighted average price as quoted by the NASDAQ through March
9, 2018, the last trading day prior to March 12, 2018, the date
that the Company announced it had received a “going-private”
proposal from the Sponsors.
Immediately following the consummation of the
merger, Parent will be beneficially owned by the Sponsors, Mr. Lee
Ligang Zhang, the chairman of the board of directors and the chief
executive officer of the Company, and Mr. Boquan He, the vice
chairman of the board of directors of the Company (the foregoing,
together with Parent and Merger Sub, the “Buyer Group”). As of the
date of the Merger Agreement, Mr. Lee Ligang Zhang and Mr. Boquan
He (collectively, the “Rollover Shareholders”) beneficially owned
in the aggregate approximately 25.6% of the outstanding Shares,
representing approximately 43.1% of the total voting power of the
outstanding Shares, and have agreed with the Sponsors to roll over
certain Shares (including Shares represented by ADSs) beneficially
owned by the Rollover Shareholders at the consummation of the
merger in connection with the Transactions (the “Rollover
Shares”).
Subject to the terms and conditions of the
Merger Agreement, at the effective time of the merger, Merger Sub
will merge with and into the Company, with the Company continuing
as the surviving company and a wholly-owned subsidiary of Parent,
and each of the Shares (including Shares represented by ADSs)
issued and outstanding immediately prior to the effective time of
the merger and each of the ADSs will be cancelled and cease to
exist in exchange for the right to receive US$41.20 per Share or
US$20.60 per ADS, in each case, in cash, without interest, except
for (i) Shares held by Parent, the Company or any of their
respective subsidiaries, (ii) Shares issued to the depositary of
the Company’s ADS program and reserved for the exercise of the
options granted under the Company’s share incentive plans, (iii)the
Rollover Shares, and (iv) Shares owned by holders who have validly
exercised and not effectively withdrawn or lost their rights to
dissent from the merger pursuant to Section 238 of the Companies
Law of the Cayman Islands, which Shares will be cancelled at the
effective time of the merger for the right to receive the fair
value of such Shares determined in accordance with the provisions
of Section 238 of the Companies Law of the Cayman Islands. At
the effective time of the merger, the Rollover Shares will be
cancelled for no consideration, and the Rollover Shareholders will
subscribe for newly issued shares of an affiliate of Parent.
If completed, the merger will result in the Company becoming a
privately-held company and its ADSs will no longer be listed on The
NASDAQ Global Select Market.
The Company’s board of directors, acting upon
the unanimous recommendation of the special committee formed by the
independent directors of the board of directors (the “Special
Committee”), approved the Merger Agreement and the transactions
contemplated by the Merger Agreement (the “Transactions”),
including the merger, and resolved to recommend that the Company’s
shareholders vote to authorize and approve the Merger Agreement and
the Transactions, including the merger. The Special Committee,
which is composed solely of independent directors of the Company
who are unaffiliated with any member of the Buyer Group or
management of the Company, exclusively negotiated the terms of the
Merger Agreement with the Buyer Group with the assistance of its
independent financial and legal advisors.
The merger, which is currently expected to close
during the third quarter of 2018, is subject to customary closing
conditions, including a condition that the Merger Agreement be
authorized and approved by an affirmative vote of shareholders
representing at least two-thirds of the Shares present and voting
in person or by proxy as a single class at an extraordinary general
meeting of the Company’s shareholders. The Company also amended its
currently effective shareholder rights plan to render it
inapplicable to the Merger Agreement and the Transactions,
including the merger.
The Buyer Group intends to fund the merger
through a combination of (i) equity financing provided by the
Sponsors in an aggregate amount equal to approximately US$1.15
billion in cash pursuant to equity commitment letters provided by
the Sponsors to the Company and (ii) rollover financing comprised
of the Rollover Shares (including Shares represented by ADSs).
The Company and certain other participants in
the Transactions will prepare and file with the U.S. Securities and
Exchange Commission (the “SEC”) a Schedule 13E-3 transaction
statement, which will include a proxy statement of the Company. The
Schedule 13E-3 will include a description of the Merger Agreement
and contain other important information about the Transactions,
including the merger, the Company and the other participants in the
Transactions.
J.P. Morgan Securities (Asia Pacific) Limited is
serving as the financial advisor to the Special Committee, Simpson
Thacher & Bartlett LLP is serving as U.S. legal counsel to the
Special Committee, Walkers is serving as Cayman Islands legal
counsel to the Special Committee, and Junhe LLP is serving as PRC
legal counsel to the Special Committee. Davis Polk & Wardwell
LLP is serving as U.S. legal counsel to the Company, and King &
Wood Mallesons is serving as PRC legal counsel to the Company.
Wilson Sonsini Goodrich & Rosati is serving
as U.S. legal counsel to the Buyer Group, and Fangda Partners is
serving as PRC legal counsel to the Buyer Group.
Additional Information about the
Merger
The Company will furnish to the SEC a report on
Form 6-K regarding the proposed transactions described in this
announcement, which will include as an exhibit thereto the Merger
Agreement. All parties desiring details regarding the transactions
contemplated by the Merger Agreement, including the merger, are
urged to review these documents, which will be available at the
SEC’s website (http://www.sec.gov).
In connection with the proposed Transactions,
including the merger, the Company will prepare and mail a proxy
statement that will include a copy of the Merger Agreement to its
shareholders. In addition, certain participants in the proposed
Transactions will prepare and mail to the Company’s shareholders a
Schedule 13E-3 transaction statement that will include the
Company’s proxy 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 WHEN THEY BECOME AVAILABLE, AS
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE
PROPOSED TRANSACTIONS, INCLUDING THE 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 Transactions, including
the 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.
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 its shareholders with respect to the
proposed Transactions, including the merger. Information regarding
the persons or entities 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
Transactions, including the 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 materials that may be filed with or furnished to the SEC
should the proposed merger proceed.
About iKang Healthcare
Group, Inc.
iKang Healthcare Group, Inc. is one of the
largest providers in China’s fast-growing private preventive
healthcare space through its nationwide healthcare services
network.
iKang’s nationwide integrated network of
multi-brand self-owned medical centers and third-party facilities,
provides comprehensive and high-quality preventive healthcare
solutions across China, including medical examination, disease
screening, dental service and other value-added services. iKang’s
customer base primarily comprises corporate clients, who contract
with iKang to deliver medical examination services to their
employees and clients, and receive these services at pre-agreed
rates. iKang also directly markets its services to individual
customers. In the fiscal year ended March 31, 2017 and fiscal
first nine months ended December 31, 2017, iKang served a
total of 5.58 million and 5.64 million customer visits,
respectively.
As of March 26, 2018, iKang has a nationwide
network of 110 self-owned operating medical centers, covering 33 of
China’s most affluent cities: Beijing, Shanghai, Guangzhou,
Shenzhen, Chongqing, Tianjin, Nanjing, Suzhou, Hangzhou, Chengdu,
Fuzhou, Jiangyin, Changzhou, Wuhan, Changsha, Yantai, Yinchuan,
Weihai, Weifang, Shenyang, Xi’an, Wuhu, Guiyang, Ningbo, Foshan,
Jinan, Bijie, Qingdao, Wuxi, Kaili, Mianyang and Zhenjiang, as well
as Hong Kong. iKang has also extended its coverage to over 200
cities by contracting with over 400 third-party facilities, which
include selected independent medical examination centers and
hospitals across all of China’s provinces, creating a nationwide
network that allows iKang to serve its customers in markets where
it does not operate its own medical centers.
Forward-looking Statements
This press release contains forward-looking
statements. These statements, including management quotes and
business outlook, are made under the “safe harbor” provisions of
the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “estimate,” “project,” “predict,” “believe,” “expect,”
“anticipate,” “intend,” “potential,” “plan,” “goal” and similar
statements. iKang may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and
Exchange Commission, in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Such
statements involve certain risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
in the forward-looking statements. These forward-looking statements
include, but are not limited to, statements about: how the
Company’s shareholders will vote at the meeting of shareholders;
whether competing offers will be made; the expected timing of the
completion of the merger; whether various closing conditions for
the transaction will be satisfied or waived; iKang’s goals and
strategies; its future business development, financial condition
and results of operations; its ability to retain and grow its
customer base and network of medical centers; the growth of, and
trends in, the markets for its services in China; the demand for
and market acceptance of its brand and services; competition in its
industry in China; relevant government policies and regulations
relating to the corporate structure, business and industry;
fluctuations in general economic and business conditions in China.
Further information regarding these and other risks is included in
iKang’s filing with the Securities and Exchange Commission. iKang
undertakes no duty to update any forward-looking statement as a
result of new information, future events or otherwise, except as
required under applicable law.
IR Contact:
iKang Healthcare Group, Inc.Christy
XieDirector of Investor RelationsTel: +86 10 5320
8599Email: ir@ikang.comWebsite: www.ikanggroup.com
FleishmanHillardEmail:
ikang@fleishman.com
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