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China Distance Education Holdings Limited Enters into Definitive Merger Agreementfor Going Private Transaction

2020-12-01 19:35

BEIJING — December 1, 2020 — China Distance Education Holdings Limited (NYSE: DL) (the “Company”), a leading provider of online education and value-added services for professionals and corporate clients in China, today announced that it has entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Champion Distance Education Investments Limited (“Parent”) and China Distance Learning Investments Limited (“Merger Sub”), a wholly owned subsidiary of Parent, pursuant to which, subject to the terms and conditions thereof, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and becoming a wholly-owned subsidiary of Parent (the “Merger”), in a transaction in which the Company will be acquired by a group of certain of the Company’s existing shareholders (including Mr. Zhengdong Zhu, co-founder, chairman of the Board and chief executive officer of the Company (“Mr. Zhu”), Ms. Baohong Yin, co-founder of the Company, deputy chairman of the Board and the spouse of Mr. Zhu (“Ms. Yin”), and their affiliated entity) and certain other existing shareholders of the Company and equity investors (collectively, the “Buyer Group”).

Upon the effectiveness of the Merger, all outstanding ordinary shares of the Company (each, an “Ordinary Share”), including Ordinary Shares represented by American depositary shares, each representing four Ordinary Shares (“ADSs”), other than Excluded Shares (as defined in the Merger Agreement) and ADSs representing Excluded Shares, will be cancelled in exchange for the right of the holders thereof to receive $2.45 in cash per Ordinary Share (the “Per Share Merger Consideration”), or $9.80 in cash per ADS (the “Per ADS Merger Consideration”).

The Per ADS Merger Consideration represents a premium of approximately 35.7% to the closing trading price of the ADSs on June 5, 2020, the last trading day prior to the Company’s announcement of its receipt of a “going-private” proposal from Mr. Zhu, Ms. Yin, andtheir affiliated entity, and a premium of 37.1% to the volume-weighted average closing price of the ADSs during the last 30 trading days prior to the Company’s receipt of the “going-private” proposal.

The Merger Agreement provides that each outstanding share option (each, a “Company Option”) to purchase Ordinary Shares, whether vested or unvested, that is issued and outstanding as of immediately prior to the effectiveness of the Merger, will be cancelled and exchanged for the holder’s right to receive, at or promptly after the effectiveness of the Merger, an amount in cash determined by multiplying (i) the excess, if any, of the Per Share Merger Consideration over the applicable exercise price of such Company Option by (ii) the number of Ordinary Shares underlying such Company Option. Each Ordinary Share subject to a Company restricted share award (each, a “Company Restricted Share Award”), whether vested or unvested, that is issued and outstanding as of immediately prior to the effectiveness of the Merger, except for the Company Restricted Share Awards held by Mr. Zhu and Ms. Yin, will be cancelled and exchanged for the holder’s right to receive, at or promptly after the effectiveness of the Merger, an amount in cash equal to the Per Share Merger Consideration.

The Company’s board of directors (the “Board”), acting upon the unanimous recommendation of a committee of independent and disinterested 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 Buyer Group with the assistance of its financial and legal advisors.

The completion of the Merger is subject to a number of customary conditions, including an affirmative vote of shareholders representing at least two-thirds of the voting power of the outstanding Ordinary Shares present and voting in person or by proxy at an extraordinary general meeting of the Company’s shareholders.The members of the Buyer Grouphave agreed to vote all of the Ordinary Shares beneficially owned by them in favor of the authorization and approval of the Merger Agreement and the Merger. The Merger is currently expected to be completed by the end of the first half of 2021. If completed, the Merger will result in the Company becoming a privately-held company, the Company’s ADSs will no longer be listed on the New York Stock Exchange, and its ADS program will be terminated.

The Buyer Group has indicated that it plans to finance the Merger through a combination of debt and equity. The Buyer Group currently beneficially owns, in the aggregate, approximately 50.14% of the outstanding Ordinary Shares (including share-based awards).

Duff & Phelps, LLC is serving as financial advisor to the Special Committee; Goulston& Storrs PC is serving as U.S. legal counsel to the Special Committee; and Morgan Lewis & Bockius LLP is serving as U.S. legal advisor to the Company. The validity of the Merger and certain other legal matters with respect to Cayman Islands law are being passed upon and advised for the Company by Conyers Dill & Pearman.

Davis Polk & Wardwell LLP is serving as U.S. legal counsel to the Buyer Group. The validity of the Merger and certain other legal matters with respect to Cayman Islands law are being passed upon and advised for the Buyer Group by Maples and Calder (Hong Kong) LLP.

Additional Information About the Merger

The Company will furnish to the U.S. Securities and Exchange Commission (the “SEC”) a current report on Form 6-K regarding the Merger, which will include the Merger Agreement as an exhibit. Shareholders and others wishing to obtain additional information regarding the Merger Agreement and 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 Merger, the Company and the Buyer Group will file with the SEC a Schedule 13E-3 transaction statement (the “Schedule 13E-3”), which will include as an exhibit a preliminary proxy statement (the “Proxy Statement”). The Company will distribute the Proxy Statement to the Company’s shareholders after it is finalized. Investors and shareholders are urged to read carefully and in their entirety the Schedule 13E-3, and in particular the Proxy Statement, and other materials filed with or furnished to the SEC when they become available, as they will contain important information about the Company, the Merger Agreement, the Merger, and related matters. In addition to receiving the Proxy Statement by mail, shareholders also will be able to obtain the full Schedule 13E-3 and the exhibits thereto, as well as other filings containing information about the Company, the Merger Agreement, 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 the Company’s shareholders with respect to the Merger. Information regarding the persons who may be considered “participants” in the solicitation of proxies will be set forth in the Proxy Statement.

This announcement is not a solicitation of a proxy, an offer to purchase, or a solicitation of an offer to sell any securities and it is not a substitute for the Schedule 13E-3, including the Proxy Statement, or other filings that may be made with the SEC in connection with the Merger Agreement and the Merger.

Safe Harbor Statements

This announcement may contain forward-looking statements. Any such statements 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,” “may,” “should,” “potential,” “continue,” “expect,” “predict,” “anticipate,” “future,” “intend,” “plan,” “believe,” “is/are likely to,” “estimate” and similar statements. The Company may also make written or oral forward-looking statements in its periodic and annual reports to the SEC, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Risks and uncertainties include the possibility that the Merger will not occur as planned if events arise that result in the termination of the Merger Agreement, or if one or more of the various closing conditions to the Merger are not satisfied or waived or if requisite shareholder approval is not obtained, and other risks and uncertainties regarding the Merger Agreement and the Merger that will be discussed in the Proxy Statement. The Company does not undertake any obligation to update any forward-looking statement or other information included in this press release, except as may be required by applicable law.

About China Distance Education Holdings Limited

China Distance Education Holdings Limited is a leading provider of online education and value-added services for professionals and corporate clients in China. The courses offered by the Company through its websites are designed to help professionals seeking to obtain and maintain professional licenses and to enhance their job skills through our professional development courses in China in the areas of accounting, healthcare, engineering & construction, legal and other industries. The Company also offers online test preparation courses for self-taught learners pursuing higher education diplomas or degrees, and practical accounting training courses for college students and working professionals. In addition, the Company provides business services to corporate clients, including but not limited to tax advisory and accounting outsourcing services. For further information, please visit http://ir.cdeledu.com.

Contacts:

In China:

China Distance Education Holdings Limited

Jiao Jiao

Tel: +86-10-8231-9999 ext. 1826

Email: IR@cdeledu.com

The Piacente Group, Inc.

Jenny Cai

Tel: +86-10-6508-0677

E-mail: dl@tpg-ir.com

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1 212-481-2050

Email: dl@tpg-ir.com

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