On October 12, 2020, Greenland Hong Kong Holdings Limited (stock code: 00337. HK, ”Greenland Hong Kong”) announced that its wholly-owned subsidiary, Shanghai Oriental Cambridge Property Development Co., Ltd. ("Oriental Cambridge"), entered into an equity transfer agreement with Greenland Holdings Corporation Limited ("Greenland Holdings"), Greenland Real Estate Group Co., Ltd. ("Greenland Real Estate") and Guangzhou Greenland Real Estate Development Co., Ltd. ("Guangzhou Greenland"), whereby Oriental Cambridge was to purchase 100% of the equity interest in Guangzhou Greenland held by Greenland Holdings and Greenland Real Estate at a consideration of approximately RMB7.26 billion. On December 31, 2020, Greenland Hong Kong announced that the parties had completed the transaction and Guangzhou Greenland became a wholly-owned subsidiary of Greenland Hong Kong.
Greenland Hong Kong is majority-owned by Greenland Holding Group (“Greenland Group”), a Fortune Global 500 company, and provides Greenland Group with an international capital operation channel and brand display window. Greenland Hong Kong acquires land in prime locations in major cities in the Pan-Pearl River Delta and supports property development and investment, in order to increase land reserves and further promote the development of the company. This acquisition is in line with the strategy of Greenland Hong Kong, i.e. (i) it embraces the Chinese government's Greater Bay Area policy and underlines its commitment to becoming a high-growth property developer in China; (ii) it focuses on major cities with investment value and growth potential in the Pan-Pearl River Delta and positions the company as a developer of high-end products; and (iii) it establishes and maintains high-quality land reserves. This acquisition will increase the basic earnings of Greenland Hong Kong and consolidate the company’s position as a leading property developer in the Pan-Pearl River Delta.
The complexity and specificity of the project mainly lie in the following aspects:
The number of M&A targets was huge. Guangzhou Greenland has a total of 49 subsidiaries and six branches and these companies have a total of 35 real estate projects all at different stages of development. The conditions of the M&A targets were complicated and JunHe carried out thorough legal due diligence on the targets.
The target companies’ valuation was difficult to determine due to various factors. JunHe issued legal opinions on the target companies’ conditions, and assisted the client and the valuer in determining the overall valuation of the target companies.
Obtaining approval from the Stock Exchange of Hong Kong (“SEHK”) was challenging. As Greenland Hong Kong is a listed company on the SEHK, and this transaction constituted a very substantial acquisition matter and a connected transaction, the SEHK was concerned about the transaction. JunHe assisted the client in preparing the filing documents together with other intermediaries, and in responding to inquiries from the SEHK in a short period of time to ultimately obtain the approval of the SEHK.
Since 2014, JunHe has acted as the PRC legal counsel to Greenland Hong Kong and provided legal services for financing, M&As and other projects. In this project, JunHe acted as legal counsel to Greenland Hong Kong and participated in the entire process of this project. JunHe’s team participated in the design of the transaction structure, conducted legal due diligence, drafted the transaction documents, issued legal opinions, prepared circulars and responded to detailed inquiries from SEHK during the entire process of the project. JunHe efficiently communicated and worked together with the client, the target companies and other intermediaries to facilitate the successful completion of this transaction.