Synutra International, Inc. (Nasdaq: SYUT), which owns subsidiaries in China that produce, distribute and sell nutritional products for infants, children and adults, today announced it has entered into an Agreement and Plan of Merger with Beams Power Investment Limited, a company with limited liability incorporated under the laws of the British Virgin Islands, and Beams Power Merger Sub Limited, a Delaware corporation and a wholly-owned subsidiary of Parent, pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Parent. Parent currently beneficially owns approximately 63.5% of the Company's outstanding shares of common stock, $0.0001 par value per share . Ms. Xiuqing Meng, spouse of Mr. Liang Zhang, is the sole shareholder of Parent. Mr. Liang Zhang is the chairman and chief executive officer of the Company.
Parent has secured a committed loan facility from Shanghai Pudong Development Bank Co., Ltd. to finance the transactions contemplated by the Merger Agreement, including the Merger.
The Company's board of directors, acting upon the unanimous recommendation of the special committee formed by the board of directors, unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and resolved to recommend that the Company's stockholders adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. The Special Committee, which is composed solely of independent directors of the Company who are unaffiliated with Parent, Merger Sub or management of the Company, exclusively negotiated the terms of the Merger Agreement with the buyer group consisting of Mr. Liang Zhang, Ms. Xiuqing Meng, Parent and Merger Sub, with the assistance of its independent financial and legal advisors.
The Merger is subject to stockholder approval as well as certain other customary closing conditions. Pursuant to the Merger Agreement, adoption of the Merger Agreement by the Company's stockholders requires the affirmative vote of (i) the holders of at least a majority of the Company Common Stock and (ii) the holders of at least a majority of the Company Common Stock other than the shares of Company Common Stock held by (a) Parent, Merger Sub and any other direct or indirect subsidiary of Parent and (b) the Company. The Company will call a meeting of stockholders for the purpose of voting on the adoption of the Merger Agreement as soon as practicable. If completed, the Merger will, under laws of the State of Delaware, result in the Company becoming a privately-held company and the Company Common Stock would no longer be listed on the NASDAQ.
Houlihan Lokey Capital, Inc. is serving as the financial advisor to the Special Committee, Cleary Gottlieb Steen & Hamilton LLP is serving as U.S. legal counsel to the Special Committee, and Potter Anderson & Corroon LLP is serving as Delaware legal counsel to the Special Committee. Wilson Sonsini Goodrich & Rosati is serving as U.S. and Delaware legal counsel to the Company.
Davis Polk & Wardwell LLP is serving as U.S. legal counsel to the buyer group.
About Synutra International, Inc.
Synutra International, Inc. (Nasdaq: SYUT) is a leading infant formula company in China. It principally produces, markets and sells its products through its operating subsidiaries under the "Shengyuan" or "Synutra" name, together with other complementary brands. It focuses on selling premium infant formula products, which are supplemented by more affordable infant formulas targeting the mass market as well as other nutritional products and ingredients. It sells its products through an extensive nationwide sales and distribution network covering all provinces and provincial-level municipalities in mainland China. As of September 30, 2016, this network comprised over 960 independent distributors and over 280 independent sub-distributors who sell Synutra products in approximately 26,900 retail outlets.
