HK SFC rules Alibaba breached Takeovers Code during CITIC21CN acquisition
Hong Kong’s Takeovers Panel Rules that Alibaba Breached Takeovers Code due to “Special Deal”
The Securities and Futures Commission’s (SFC) Takeovers and Mergers Panel (Panel) has published its decision on whether Alibaba Group Holding Limited (Alibaba) breached the Code on Takeovers and Mergers and Share Buy-backs (the Takeovers Code) when it acquired healthcare company, CITIC 21CN Company Limited (21CN). During the acquisition, Alibaba also acquired Hubei Huiyan Medical Technology Co. Ltd. (OpCo) by entering into a series of agreements (OpCo Agreements) with its sole shareholder (Mr. Chen), who was also a shareholder of 21CN.
The Panel has ruled that the OpCo Agreements constituted a special deal with favourable conditions under Rule 25 of the Takeovers Code that was not extended to all shareholders of 21CN. As a result, the whitewash waiver (Whitewash Waiver) that was granted to Alibaba was invalidated and a Rule 26 mandatory general offer obligation was triggered. However, the Panel waived that obligation because it could not arrive at a fair and reasonable price for the mandatory general offer. Read more