FIRST SHARE SWAP TRANSACTION APPROVED UNDER CHINA'S NEW M&A RULES: PAUL HASTINGS ADVISED

July 09, 2008 | BY

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Poly (Hong Kong) Investments Limited (PIL), a company incorporated in Hong Kong and listed on the Hong Kong Stock Exchange, has acquired the entire equity…

Poly (Hong Kong) Investments Limited (PIL), a company incorporated in Hong Kong and listed on the Hong Kong Stock Exchange, has acquired the entire equity interest in Shenzhen Poly Investments from China Poly Southern Group, a wholly owned subsidiary of China Poly Group.

The transaction is the first share swap deal approved by the Ministry of Commerce since the introduction of China's new merger and acquisition rules in 2006.

The Rmb1,390 million acquisition is a major transaction under the Hong Kong Stock Exchange Listing Rules requiring shareholders' approval. The deal was funded by PIL issuing and allotting new shares to Poly Southern Group.

Beijing Alliance Law Firm acted as the PRC counsel on this deal, while Paul, Hastings, Janofsky & Walker advised PIL on a range of compliance issues, as well as the sale and purchase agreements and the vetting of the shareholder circular. The Paul Hastings team was led by corporate partners Chau Ho and Steve Woo and included associates Pei Fang and Vanessa Chan.

“We are particularly pleased to have completed this deal as the new rules, which were introduced in August 2006, only allow overseas investors to invest in Chinese firms through share swaps in certain defined circumstances,” Ho said.

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