上海家化(600315)

J ahwa parent company to initiate a tender offer

Jahwa announced that its original plan of asset restructuring and share purchasewould not be implemented as the relevant partners have not reached a consensus.Meanwhile, the company decided to take its alternative plan, under whichJahwa Group has planed to initiate part of the tender offer for its shareholders(excluding China Ping An Life Insurance, Shanghai Huisheng Industrial Companyand Shanghai Tai Fu Xiang Er Equity Investment Fund Partnership). In addition, thecompany’s share trading on Shanghai Stock Exchange would remain suspendedon 12 October 2017.Jahwa’s share were suspended from trading on 21 Sep 2017 and it expects toresume trading on 13 Oct and announce the further details of this tender offer.

Deutsche Bank View

To recap, Jahwa on 1 Nov 2015 had suspended the trading and announced thatPing An, its controlling shareholder intended to buy up to 31% of Jahwa (208mshares) at RMB40/share, via the newly set up company Shanghai Tai Fu Xiang ErEquity Investment Fund Partners. This would have increased Ping An’s stake to58.87% from 27.9%, if the acquisition was completed as planned. However on7 Dec 2015, Jahwa resumed trading and announced that Ping An has acquired10.2m shares, which was far below the original target. Post the share purchase,Ping An’s share of SJ increased from 27.9% to 29.4%