Genetron enters definitive merger agreement for going private transaction

Genetron announced today that it has entered into a definitive agreement and plan of merger with New Genetron and Genetron New Co, a wholly-owned subsidiary of parent. Pursuant to the merger agreement and 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, in a transaction implying an equity value of the company of approximately $126M. Pursuant to the terms of the merger agreement, at the effective time of the merger, each ordinary share, par value $0.00002 per share, of the company issued, outstanding and not represented by American depositary share of the company immediately prior to the effective time, other than the excluded shares and the dissenting shares, will be cancelled and cease to exist, in exchange for the right to receive $0.272 in cash per share without interest, and each ADS, issued and outstanding immediately prior to the effective time, other than ADSs representing the excluded shares, together with each share represented by such ADS, will be cancelled and cease to exist, in exchange for the right to receive $1.36 in cash per ADS without interest. The merger consideration represents a premium of approximately 15% to the closing price of the company’s ADSs on August 19, 2022, the last trading day prior to the company’s announcement of its receipt of the “going-private” proposal, and a premium of approximately 21% to the average closing price of the company’s ADSs during the last 30 trading days prior to its receipt of the “going-private” proposal. The merger consideration represents a premium of approximately 42% to the closing price of the company’s ADSs on October 10, the last trading day prior to this press release. Immediately following the consummation of the merger, Parent will be beneficially owned by Sizhen Wang, co-founder, chairman of the board of directors and chief executive officer of the company, CICC Healthcare, Tianjin Kangyue Business Management Partnership, Surrich International, an investment entity wholly-owned by Wuxi Guolian, Wealth Strategy Holding, CCB Investment Fund and Wuxi Huihongyingkang Investment, and/or certain affiliates of the members of the consortium, and other rollover shareholders. Concurrently with the execution of the merger agreement, Wang, CICC, and certain other shareholders of the company entered into a rollover and support agreement with parent, pursuant to which the rollover shareholders have agreed to vote all the shares beneficially owned by them in favor of the authorization and approval of the merger agreement and to have certain shares of the rollover shareholders cancelled at the effective time for no cash consideration from company in exchange for certain equity interests of parent. The consortium intends to fund the Merger through a combination of cash contributions from certain members of the consortium pursuant to their respective equity commitment letters and rollover equity contributions from the Rollover Shareholders. The board, acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the board, approved the merger agreement and the merger and resolved to recommend 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 assistance of its financial and legal advisors. The merger, which is currently expected to close during the first quarter of 2024, is subject to customary closing conditions, including, among others, that the merger agreement shall be authorized and approved by an affirmative vote of shareholders representing at least two-thirds of the shares present and voting in person or by proxy at an extraordinary general meeting of the company’s shareholders, (ii) that the aggregate amount of dissenting shares shall be less than 15% of the total outstanding shares immediately prior to the effective time, and certain regulatory approvals, including the ODI Approval for certain consortium members in China. As of the date of this press release, members of the consortium and the other rollover shareholders beneficially own shares representing approximately 59.7% of the total shares issued and outstanding as of March 31. If completed, the merger will result in the company becoming a privately-held company and its ADSs will no longer be listed on the Nasdaq Global Market.