Nathan Powell
Partner 合伙人 | Legal
Hong Kong
Nathan Powell
Partner 合伙人
Hong Kong
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Take-Private Transactions - Cayman Islands Law Considerations
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Nathan Powell
Team: Florence Chan, Rachel Huang, Cecilia Li, Cynthia Anandajayasekeram, Angus Davison, Bradley Kruger
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Take-private transactions have long been a feature of the legal landscape in the Cayman Islands, whether as a tool for acquiring a company or in order to re-list the company on a more favourable or convenient stock exchange.
The Companies Act (Revised) of the Cayman Islands (the Companies Act) provides certain avenues to take-private a Cayman Islands company - from the traditional court approved schemes, to simpler and more cost-effective mechanism for mergers and consolidations.
This document sets out an overview of the different options for stakeholders and the key considerations in respect of each option to assist in determining which mechanism might best suit the needs of particular companies.
Ogier has been involved in a number of recent high value take-private transactions in the Cayman Islands. Our corporate specialists also work closely with our cross-jurisdictional dispute resolution teams who have significant expertise in the area of shareholder and valuation disputes.
With Cayman Islands specialists based in the Caribbean, Asian and European time-zones, Ogier is able to provide its clients with seamless round the clock advice on take-private matters.
Our lawyers and professional staff based in Hong Kong speak English, Cantonese and Mandarin to better service our Asia-based clients in their native languages.
View the PDF version of this briefing here.
私有化交易 开曼群岛法律考量因素
View the simplified Chinese version of this briefing here.
Take-private methods
Shareholder considerations
| Take-private option | Companies Act reference | Required Approvals | Indicative timing | Court process? |
| Statutory merger | Sections 232-239 |
Special resolution of the shareholders of each company (being 66%, unless higher in the articles of association) |
Provided no litigation for fair value appraisal, process can be completed in a short time-frame (as little as one to two months). | Generally, no Court approval necessary. However, dissenting shareholders could invoke fair value appraisal rights under section 238 of the Companies Act which could result in uplift for dissenting shareholders' shares |
| Tender offer and squeeze-out | Section 88 | Need to have approval of 90% of independent shareholders (those not already owned by the bidder or its affiliates) | At least four to six months following the tender offer being made | The Court will generally not intervene unless an application is made by the dissenting shareholders (and even then it will only intervene in limited circumstances) |
| Tender offer and streamlined merger | Section 233(7) | Provided the bidder has acquired (directly or indirectly) 90% of the shares in the target company, no specific shareholder approval required | Once the tender offer process is complete, the streamlined merger can take place shortly thereafter (as soon as within one month) |
The Court will generally not intervene unless an application is made by the dissenting shareholders (and even then it will only intervene in limited circumstances) |
| Scheme of arrangement | Sections 86-88 | Requires the approval of 75% in value of the members or class of members, as the case may be | Between three to six months (but could be longer depending on number of classes of shares, court availability etc) | Yes. This process requires the approval of the court of the scheme before it can be implemented. There will be at least two hearings (a convening hearing and a sanction hearing) |
Advantages and disadvantages
| Take-private option | Advantages | Disadvantages |
|
Statutory merger |
Where no dissenting shareholders, can be completed quickly and efficiently |
|
| Tender offer and squeeze-out |
No fair value appraisal right for dissenting shareholders who will be bought out at the tender offer value |
|
| Tender offer and streamlined merger |
|
Requires the bidder to be holding at least 90% of the shares in target |
| Scheme of arrangement |
|
|
Our Experience
New Frontier Public Holding Ltd
Ogier is acting as Cayman Islands counsel to the investor consortium comprising New Frontier Public Holding Ltd., Vivo Capital Fund IX (Cayman), L.P., Fosun Industrial Co., Limited, the Private Equity business within Goldman Sachs Asset Management, certain affiliate of Warburg Pincus LLC and certain other investors, in the proposed US$1.58 billion take private of New Frontier Health Corporation (NYSE: NFH).
51job, Inc.
Ogier advised DCP Capital Partners, Ocean Link Partners Limited and Mr. Rick Yan, the Chief Executive Officer of 51job, Inc. in US$5.7 billion take private of 51job, Inc., a NASDAQ listed company and a leading provider of integrated human resource service in China.
Xiezhong International
Ogier advised Xiezhong International Holdings Limited on its privatisation by way of a scheme of arrangement and delisting from the Hong Kong Stock Exchange. The plan was approved by shareholders pursuant to an approximately US$31.3 million (equivalent to approximately HK$242.3 million) offer by Brilliance International Holding Limited and Golden Fair Chemical (Holding) Limited.
Xiezhong International delisted from the Hong Kong Stock Exchange.
Transocean Ltd
Ogier advised Transocean Ltd on the Cayman law aspects of its acquisition (by way of statutory merger) of Ocean Rig UDW Inc., valued at approximately US$2.7 billion. The cash and stock merger was one of the largest in the oil and gas industry in 2018.
Borr Drilling Limited
Ogier advised Borr Drilling Limited on the Cayman law aspects of its acquisition (by way of tender offer and statutory merger) of Paragon Offshore Limited, valued at approximately US$212 million.
JSR Corporation
Ogier acted as the Cayman legal advisor to JSR Corporation in connection with its NTD12 billion(US$400 million) acquisition of the Taiwan listed Crown Bioscience International, a global drug discovery and development services company providing translational platform to advanced medical research, by way of a Cayman statutory merger. This acquisition marks JSR's largest life sciences focused investment to date.
MOGU Holdings Limited
Ogier acted as Cayman Islands counsel to MOGU Holdings Limited in its strategic merger with Meiliworks Inc., valuing the combined company at US$3 billion.
Key contacts
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Florence Chan
Partner 合伙人 | Legal
Hong Kong
Florence Chan
Partner 合伙人
Hong Kong
-
Rachel Huang
Partner | Legal
Hong Kong
Rachel Huang
Partner
Hong Kong
-
Cecilia Li
Partner 合伙人 | Legal
Hong Kong
Cecilia Li
Partner 合伙人
Hong Kong
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Cynthia Anandajayasekeram
Partner | Legal
Cayman Islands
Cynthia Anandajayasekeram
Partner
Cayman Islands
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Angus Davison
Partner | Legal
Cayman Islands
Angus Davison
Partner
Cayman Islands
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Bradley Kruger
Partner | Legal
Cayman Islands
Bradley Kruger
Partner
Cayman Islands
About Ogier
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
Disclaimer
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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