Whoa! Shanghai Stock Exchange delays $6bn Ingram Micro takeover
How will you fund this, Tianjin Tianhai?
Tianjin Tianhai, the Chinese logistics giant, has delayed next week’s shareholder meeting to rubber stamp the $6bn takeover of Ingram Micro as it gathers data requested by the Shanghai Stock Exchange (SSE).
Tianjin Tianhai, owned by the conglomerate HNA Group, revealed in February its intended acquisition of Ingram, the world ’s largest tech distributor in a $38.90 per share all cash deal.
Some 99.8 per cent of Ingram’s investors backed the sale last month, and the US Federal Trade Commission and the Department of Justice gave the thumbs up too.
But now the SSE has written to Tianjin Tianhai wants assurances on funding, and is scrutinising the transaction bank loan size, the duration, interest rates and if the outlay will “have a negative impact” on the firms.
The exchange also wants details of the exit plan for a Chinese co-investor; if other risks could arise from the buy; and if Tianjin Tianhai anticipates stumbling blocks in the way of regulatory approval.
Ingram Micro reported a dramatic sales slide for its Q1 of calendar ’16, down 12 per cent to $2.66bn and income from operations dived 60.6 per cent to $38.4m and net profit after currency losses and taxes crossed the line at $1.89m versus $43.2m.
SSE has asked Tianjin Tianhai to explain why "underlying net profit fell… sharply” in the last reported quarter, and questioned why Ingram’s net profit margins between 2013-15 were “lower than comparable companies”.
The exchange wants details of the termination fee that Tianjin Tianhai tht must pay Ingram $400m if the sale is cancelled by regulators - this is to be paid into an escrow account with Deutsche Bank’s Americas division, according to reports.
The SSE also wants to know more about the equity incentive plan to be coughed to Ingram Micro senior management.
Tianjin Tianhai will set another date for a shareholder meet once the information required by the exchange is sent. ®