Hangzhou Hailianxun to acquire Hangzhou Steam Turbine in share-for-share merger

Hangzhou Hailianxun Technology Co. will absorb Hangzhou Steam Turbine Power Group Co. through a share-for-share merger, with Hangzhou Hailianxun issuing A-shares to all Hangzhou Steam Turbine shareholders. Following the merger, Hangzhou Steam Turbine will delist and cease to exist as a legal entity, with Hangzhou Hailianxun inheriting all its assets, liabilities, business operations, and personnel. The share exchange ratio is 1:1, based on the average trading price over the 20 trading days prior to the pricing base date. Hangzhou Steam Turbine's share price was HK$7.77 and Hangzhou Hailianxun's was RMB9.56, with Hangzhou Steam Turbine receiving a 34.46% premium.

The transaction is deemed a major asset restructuring and a related-party transaction, as Hangzhou Capital, the controlling shareholder of Hangzhou Hailianxun, is also the indirect controlling shareholder of Hangzhou Steam Turbine. Hangzhou Capital will provide liquidity to dissenting shareholders. Post-merger, Hangzhou Hailianxun's net profit and EPS are projected to increase. The deal aims to address Hangzhou Steam Turbine's historical B-share issues, expand financing channels, and integrate resources, fostering synergy in industrial turbomachinery and power information technology.

The merger is expected to improve the competitiveness and investment value of the combined entity. To safeguard the interests of small and medium shareholders, Hangzhou Capital has committed to investing up to RMB1.5 bn in Hangzhou Hailianxun shares if its stock price falls below RMB9.56 for 15 consecutive trading days after the merger's completion.