Hollysys gains afer Dazheng-Led group raises offer to $29.50 a share ; Hollysys rejects

Update 9:55pm: Adds Hollysys rejection of consortium offer.

Hollysys (NASDAQ:HOLI) quickly rose 0.8% after a consortium led by Dazheng Group disclosed that it improved its takeover offer.

The group raised its offer for Hollysys to $29.50 a share in recent days from an earlier bid of $29 in December, according to a statement on Monday.

The consortium said in the statement that it had discussions with the company about its improved offer, though they failed to lead to a deal.

“These efforts proved futile, prompting the Consortium to pursue remedies against what it perceives as a problematic and ill-intentioned sales process,” the consortium said in the statement.

Hollysys (HOLI) confirmed in a statement late Monday that it rejected Dazheng Group’s improved offer.

“The Special Committee does not have confidence in the certainty of Dazheng’s equity financing nor its ability to successfully close a transaction, given its constantly changing equity consortium structure, including the last-minute introduction of a new member that is purportedly now its primary source of equity funding but with no proper financial arrangement to provide certainty of funds,” Hollysys said in the statement.

The latest update comes after Hollysys said in late December that it didn’t receive any offer that it deemed superior to its $26.50 a share sale to Ascendent Capital.

Representatives for the Dazheng consortium and Hollysys (HOLI) didn’t immediately respond to Bloomberg requests for comment.

“We remind shareholders that a superior proposal is more than just a higher headline price, but is also required to demonstrate, among other things, committed financing and a viable path to the transaction closing,” a Hollysys (HOLI) spokesperson said in the statement at the time.

The consortium has secured financing from an institutional investor and banks, according to a Bloomberg report on Monday, which broke the news on the increased offer. The newest bid includes a break-up fee of 1 billion yuan ($139) million.

The offer also comes after reports that proxy firms ISS and Glass Lewis last week recommended that Hollysys (HOLI) holders vote to reject the Ascendent Capital deal.

Hollysys (HOLI) holders are scheduled to vote on the Ascendent Capital Partners $26.50 a share deal on Feb. 8.