Marbridge Daily

Gridsum Enters into Definitive Agreement for Going-Private Transaction

Gridsum, 10/01/20

Beijing-based Gridsum Holding Inc. ("Gridsum" or the "Company") (Nasdaq: GSUM), a leading provider of cloud-based big-data analytics and artificial intelligence ("AI") solutions in China, today announced that it has entered into an Agreement and Plan of Merger (the "Merger Agreement") with Gridsum Corporation ("Parent"), and Gridsum Growth Inc., a wholly owned Subsidiary of Parent, pursuant to which the Company will be acquired by an investor consortium led by Mr. QI Guosheng (the "Chairman"), chairman of the board of directors of the Company (the "Consortium") in an all-cash transaction that values the Company's equity at approximately USD 75.5 mln (the "Merger").

Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each ordinary share of the Company (each, a "Share") issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist in exchange for the right to receive USD 2.00 in cash without interest, and each outstanding American depositary share of the Company (each, an "ADS," representing one class B ordinary share of the Company) will be cancelled in exchange for the right to receive USD 2.00 in cash without interest, except for (a) Shares (including Shares represented by ADSs), Company's options and restricted share unit awards owned by the Chairman, Mr. YU Guofa and their affiliates (the "Rollover Securityholders") which will be rolled over in the transaction, (b) Shares (including Shares represented by ADSs ) owned by Parent, Merger Sub, the Company (as treasury shares, if any) or any of their direct or indirect wholly-owned subsidiaries, (c) Shares (including Shares represented by ADSs ) reserved (but not yet allocated) by the Company for settlement upon exercise or vesting of Company's options and/or restricted share unit awards, and (d) Shares held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 238 of the Companies Law of the Cayman Islands, which will be cancelled and cease to exist in exchange for the right to receive the payment of fair value of those dissenting shares in accordance with Section 238 of the Companies Law of the Cayman Islands.

The merger consideration represents a premium of approximately 217.5% to the closing price of the Company's ADSs on April 30, 2019, the last trading day prior to the Company's announcement of its receipt of a revised "going-private" proposal from the Consortium, and a premium of approximately 290% to the average closing price of the Company's ADSs during the 30 trading days prior to its receipt of the "going-private" proposal.

Kang Bo Si Nan (Beijing) Technology Co., Ltd., a company formed by the Consortium and the sole shareholder of Parent ("KBSN"), and the Rollover Securityholders intend to fund the Merger with a combination of rollover equity and cash, and KBSN has delivered copy of an executed equity commitment letter to the Company.

The Board, acting upon the unanimous recommendation of a committee of independent directors established by the Board (the "Special Committee"), approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

The Merger is currently expected to close in the first quarter of 2021 and is subject to customary closing conditions including the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the Company's shareholders. The Rollover Securityholders have each agreed to vote all of the Shares and ADSs they beneficially own, which represent approximately 68% of the voting rights attached to the outstanding Shares as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the Merger. 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 will prepare and file with the U.S. Securities and Exchange Commission 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 Merger, the Company and the other participants in the Merger.

Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee. Orrick, Herrington & Sutcliffe LLP is serving as U.S. legal counsel to the Special Committee.

Hogan Lovells is serving as U.S. legal counsel to the Consortium.

Keywords: delist big data Internet analytics artificial intelligence GSUM Qi Guosheng Yu Guofa M&A