Zeng Hsing Industrial : The Board of Directors has resolved to acquire issued and outstanding ordinary shares of Turvo International Co., Ltd. through public tender offer

Close

Today's Information

Provided by: ZENG HSING INDUSTRIAL CO., LTD.
SEQ_NO	2	Date of announcement	2022/06/06	Time of announcement	21:23:08
Subject	The Board of Directors has resolved to acquire issued and outstanding ordinary shares of Turvo International Co., Ltd. through public tender offer
Date of events	2022/06/06	To which item it meets	paragraph 11
Statement	1.Type of merger and acquisition (e.g.merger, spin-off, acquisition, or share transfer):Public Tender Offer 2.Date of occurrence of the event:2022/06/06 3.Names of companies participating in the merger and acquisition (e.g., name of the other company participating in the merger, newly established company in a spin-off, acquired company, or company whose shares are transferred): Public tender offer to acquire 21.56% of the issued and outstanding ordinary shares of Turvo International Co., Ltd.(" Turvo", ticker 2233). 4.Trading counterparty (e.g., name of the other company participating in the merger, company spinning off, or trading counterparty to the acquisition or share transfer): Shareholders of Turvo who tender shares 5.Whether the counterparty of the current transaction is a related party: No 6.Relationship between the trading counterparty and the Company (investee company in which the Company has re-invested and has shareholding of XX%), explanation of the reasons for the decision to acquire from or transfer shares to an affiliated enterprise or related party, and whether it will affect shareholders' equity: If a related party of the Company participates in the tender offer, the company must not refuse or exclude it according to law. Therefore, the transaction counterparty may be a related party. Public Tender Offer price and conditions are consistent, thus does not affect shareholders' equity. 7.Purpose of the merger and acquisition: The company has been focusing on the research and development, manufacturing and sales of sewing machines and other fields for a long time. In the face of changes in the external environment such as the international situation and international trade, the company plans to diversify its investment activities. By combining the resources of both parties, it is committed to developing into a comprehensive professional precision manufacturing enterprise and increasing the investment income of the company. 8.Anticipated benefits of the merger and acquisition: Turvo's main business is machining, manufacturing, and trading precise metal parts, which are mostly used in automobiles, bicycles, and other applications. Turvo's profits and performance have been steadily increasing. This investment aims to increase cooperation between the two parties in areas such as production technology, material application, product application, core capabilities, resource integration, and other strategic cooperation, in order to improve both parties' return on assets and shareholders' equity. 9.Effect of the merger and acquisition on net worth per share and earnings per share: After the completion of the tender offer, if the comprehensive effect can be brought into full play, it should have positive benefits for the Company's future book value and earnings per share. 10.Follow-up procedures for mergers and acquisitions, including the time and method of payment of the consideration for mergers and acquisitions, etc.: I. The Purchase Price for the Offer: NT$130 per share in cash. II. If all conditions of the Tender Offer have been satisfied, the tendered shares and all considerations for this Tender Offer will be delivered within 5 business days (including the 5th business day), after the expiration of the Tender Offer period. KGI Securities will first issue the payment of the consideration of this Tender Offer via a bank transfer to the Offerees' bank accounts, as provided by the TDCC. If the transfer cannot be completed due to incorrect bank account information or other reasons, such payment will be provided in a cheque (non-negotiable crossed cheque) via registered mail to the address provided by the Taiwan Depository & Clearing Corporation or the Offerees on the next business day after confirming that the payment cannot be delivered via a bank transfer. The consideration shall be the consideration of the shares actually acquired from each Offeree, deducted by the statutory securities transaction tax, expenses for bank remittance or postage, service fees to the Taiwan Depository & Clearing Corporation and securities brokers (which shall be calculated per the times of depositing), and other relevant expenses. The consideration will be calculated to the dollar digit in "New Taiwan Dollars"(if less than a dollar , it will not be counted). III. To avoid that the Purchase Price received is not enough to pay the securities transaction tax, service fees to the TDCC and securities brokers, expenses for bank remittance, postage for delivery of check by a registered mail or other relevant expenses, for the shareholder who intends to participate in the Tender Offer but holds less than 1,000 shares, such tender will not be accepted. 11.Types of consideration for mergers and acquisitions and sources of funds: The Tender Offer is being paid for totally in cash. The source of funds for the Tender Offer is its own funds. 12.Share exchange ratio and calculation assumptions: (1) Exchange Ratio: Not applicable. The Purchase Price for the Offer: NT$130 per share in cash. (2) Calculation Basis: The tender offer consideration is determined after giving the acquisition premium, based on objective market data, considering the operating conditions of the acquired company, and comparing it to peers of listed OTC companies, and an independent expert is also commissioned to issue an opinion on the reasonableness of the tender offer of Turvo's common stock price. 13.Whether the CPA, lawyer or securities underwriter issued an unreasonable opinion regarding the transaction: N/A 14.Name of accounting, law or securities firm: BestMed Associated CPA 's Firm. 15.Name of CPA or lawyer: Pan, szu hsuan 16.Practice certificate number of the CPA: Accountant certificate number: No.FSC certificate-6436 17.The content of the independent expert opinion on the reasonableness of the share exchange ratio, cash or other assets allotted to shareholders in this merger and acquisition: (1) CPA uses the price-earnings ratio method and the price-to-book value ratio method of the market price method and the market comparison method, as well as the premium rate of non-quantitative adjustment, to determine the reasonable price range of Turvo's per share based on quantifiable financial figures and objective market data. The price ranges from NT$120.96 to NT$136.21. ZENG HSING proposes to buy Turvo's ordinary shares through the tender offer for NT$130 per share, which is within the price range described above and should be appropriate. (2) Turvo's major activity is the design and manufacture of precision metal components, which are mostly used in the automobile industry but also in medical and industrial settings. Due to the large number of companies involved in the production of metal precision machining parts, select GLOBAL PMX and GLOBAL TEK, which are also used in the automotive industry and are involved in the medical and industrial industries, based on Turvo's prospectus for 2019 and the list of peers recommended by ZENG HSING. Automotive applications include FBT and T.Y. from the same industry. A total of four peers were chosen. Please refer to the attached file of fairness opinion in Tender Offer Prospectus. (3) N/A (4) N/A 18.Estimated date of completion: According to laws and rules, this public takeover case must be submitted to and disclosed to the Financial Supervisory Commission, the reporting date of the Tender Offer is expected to be no later than June 7, 2022.The start date of the Tender Offer is expected to be no later than June 8, 2022. The public offer period is expected to start from June 8, 2022 to July 6, 2022, and the time for accepting the tendering of the shares is from 9:00 am to 3:30 pm (Taiwan time) on each business day during the public offer period. but the company may report to the Financial Regulatory Commission in accordance with relevant laws and regulations and extend the public offer period, but the extension period shall not exceed 50 days. If all conditions of the Tender Offer have been satisfied and the company has completed the remittance as scheduled, the Tender Agent engaged by the Offeror will issue the total payment of the Consideration within 5 business days (including the 5th business day) following the expiration of the Tender Offer period (or the extended Tender Offer period). 19.Matters related to the assumption of corporate rights and obligations of the dissolving company (or spin-off) by the existing or newly-established company: N/A 20.Basic information of companies participating in the merger: N/A 21.Matters related to the spin-off (including estimated value of the business and assets planned to be transferred to the existing company or new company.The total number of shares to be acquired by the spun-off company or its shareholders, and their respective types and no.Matters related to the reduction, if any, in capital of the spun-off company)(note: not applicable for announcements unrelated to spin-offs):N/A 22.Conditions and restrictions for future transfer of shares resulting from the merger and acquisition:N/A 23.The plan after the merger and acquisition is completed: (1)The company has been focusing on the research and development, manufacturing and sales of sewing machines and other fields for a long time. In the face of changes in the external environment such as the international situation and international trade, the company plans to diversify its investment activities. By combining the resources of both parties, it is committed to developing into a comprehensive professional precision manufacturing enterprise and increasing the investment income of the company. Turvo's main business is machining, manufacturing, and trading precise metal parts, which are mostly used in automobiles, bicycles, and other applications. Turvo's profits and performance have been steadily increasing. This investment aims to increase cooperation between the two parties in areas such as production technology, material application, product application, core capabilities, resource integration, and other strategic cooperation, in order to improve both parties' return on assets and shareholders' equity. After the completion of the tender offer, if the comprehensive effect can be brought into full play, it should have positive benefits for the Company's future book value and earnings per share. (2)Except as expressly stated in the Tender Offer Prospectus, there are no additional substantial circumstances affecting Turvo's shareholders' equity that the Company is aware of or expects. Please refer to the Tender Offer Prospectus. 24.Other important terms and conditions:None 25.Other major matters related to the mergers and acquisitions: None 26.Any objections from directors to the transaction: 13,000,000 shares in total (i.e. "Expected Volume to be Acquired"); i.e. 21.56% of 60,288,089 the total number of issued common shares of the Target Company as shown on the website of the Ministry of Economic Affairs as of the date of filing the Tender Offer (13,000,000/60,288,089 shares=21.56%). In the event that the final number of shares validly tendered is below the Expected Volume to be Acquired but has reached 3,015,000 shares (approximately 5% of all shares of the Target Company) (i.e. Minimum Number of Shares to be Acquired), the conditions of the Tender Offer in respect of number of shares to be acquired shall be deemed to have been met. After all conditions to the consummation of the Tender Offer are satisfied (i.e. the final number of shares validly tendered reaches the Minimum Number of Shares to be Acquired), the Offeror shall acquire the Expected Volume to be Acquired at the most, provided that this Tender Offer has not been suspended pursuant to the law. In the event that the number of all the tendered shares is higher the Expected Volume, the Offeror shall acquire the shares tendered from all the Offerees on a pro-rata basis. To avoid that the Purchase Price received is not enough to pay the securities transaction tax, service fees to the TDCC and securities brokers, expenses for bank remittance, postage for delivery of check by a registered mail or other relevant expenses, for the shareholder who intends to participate in the Tender Offer but holds less than 1,000 shares, such tender will not be accepted. 27.Information on interested directors involved in the mergers and acquisitions: Wu Zhisheng, an independent director of the company who also serves as a director of Turvo, abstained from all relevant ideas of the tender offer, did not participate in discussions, and did not exercise voting rights. 28.Whether the transaction involved in change of business model: None 29.Details on change of business model:N/A 30.Details on transactions with the counterparty for the past year and the expected coming year: for the past one year: No the next year: After completion of the Tender Offer, the Offeror will make a separate assessment depending on the number of shares acquired upon the expiry date of the public tender offer, but no specific plan is in place now. 31.Source of funds:Self-owned fund 32.Any other matters that need to be specified: I.To carry out this case, it is proposed that the board of directors authorize the chairman to handle all necessary procedures and actions on behalf of the company, including but not limited to signing and delivering all relevant documents and contracts, filing applications or declarations with relevant competent authorities, and other related matters. If the competent authority's instructions are not followed, or if the approval, permission, and declaration from the relevant competent authority are not available due to changes in market conditions and objective environment, or if there are other justifiable reasons, it is necessary to amend the relevant filing documents in this case, or to extend the public offer period or complete other unfinished business. It is proposed that the chairman of the board be given authority to resolve the situation. II.According to laws and rules, this public takeover case must be submitted to and disclosed to the Financial Supervisory Commission, the reporting date of the Tender Offer is expected to be no later than June 7, 2022.The start date of the Tender Offer is expected to be no later than June 8, 2022. III.During the epidemic prevention period, the phone-call tender method and on-line tender method are more suggested. Should you have any questions, please kindly contact KGI Securities at the tender offer hotline [phone]) or the website of KGI Securities (https://www.kgi.com.tw/). IV.The aforementioned English translation is for reference only, please refer the Chinese announcement of the Company.