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Dazheng Group Reaffirms Commitment to Acquire Hollysys Automation Technologies at US$29.50 per share and Urges Shareholders to Vote Against the Lower Priced Ascendent Transaction


Buyer Consortium has acted in good faith in attempts to negotiate a transaction with Hollysys and has demonstrated financing above industry standards

Hollysys’ claims against the Buyer Consortium demonstrate prejudice against the Buyer Consortium and wrongly prevent shareholders from considering the Buyer Consortium’s higher offer

Contemplated transaction with Ascendent is subject to potential Chinese national security review and outbound investment approval and puts shareholders at risk of closing uncertainty

Buyer Consortium urges shareholders to vote AGAINST the Ascendent transaction and call upon the Hollysys Board of Directors to convene a shareholder meeting to present the Buyer Consortium’s proposal to shareholders for their consideration

Buyer Consortium will continue its effort to acquire Hollysys, will continue soliciting AGAINST the Ascendent transaction

HONG KONG–(BUSINESS WIRE)–Buyer Consortium (“the Consortium”) led by Dazheng Group Acquisition Limited (“Dazheng Group”) today issued the following public letter to shareholders of Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) (“Hollysys”), after the latest unwarranted rejection from the Hollysys Special Committee.

The full text of the Consortium’s letter is as follows:

Hollysys Shareholders,

You have a critical decision to make on February 8, 2024, about the future of Hollysys.

We urge you to vote AGAINST the Ascendent Capital transaction and urge the Board of Directors (“Board”) of Hollysys to comply with its fiduciary duty and convene a shareholder meeting to allow shareholders to consider the offer from the Consortium which realizes greater value for Hollysys shareholders. The Special Committee of the Board (“Special Committee”) has engaged in a disingenuous sales process for Hollysys, which has resulted in the Board only allowing shareholders to consider the Ascendent transaction and the Board recommending shareholders accept Ascendent’s $26.50 proposal over the Consortium’s $29.50 proposal (11.3% higher). Ascendent’s financing is uncertain, and the Ascendent transaction is subject to regulatory approvals, including potential Chinese national security review and outbound investment approval. Despite the Special Committee’s assertions, the proposed transaction with Ascendent Capital has not been held to an adequate level of scrutiny, has significant closing uncertainty and leaves shareholders exposed to considerable risk.

Institutional Shareholder Services (“ISS”)and Glass Lewis have both recommended shareholders vote against the Ascendent transaction and it is not surprising that multiple shareholders have voiced their disdain for the proposed Ascendent transaction.

In a press release issued on January 29, 2024, and another press release issued on January 31, 2024, the Special Committee makes several claims against the credibility of the Consortium, led by the Dazheng Group, and the engagement process over the last several weeks. These claims are misguided and lack proper supporting evidence, further casting doubt on the transparency and integrity of the sales process and evidencing a failure to uphold the Board’s fiduciary duty to maximize shareholder value. The Board has no justification for refusing to allow shareholders to receive US$29.50 per share.

FACT: The Board has been deliberately understating the growth potential of Hollysys in order to maintain long-term control over the Company. Although nearly one third of the shareholders validly requisitioned a shareholders meeting to gain control of the Board so that a buyout offer from the Consortium could be put to the shareholders, the Board refused to convene a timely shareholders meeting, forcing a shareholder to go to court to seek a court order requiring a meeting to be convened and an injunction to prevent the Board entering into the Ascendent transaction. The day before the court hearing, the Board hastily entered into a merger agreement with Ascendent to take Hollysys private, failing to maximize shareholder value by running an opaque sales process, and guaranteeing continued control of Hollysys for the Board. Since the beginning of the sales process (which was only started as a result of the efforts of the Consortium), the Consortium, led by the Dazheng Group, has constituted a threat to the Board’s control and as a result, the Special Committee has continually demonstrated prejudice and has unjustly acted to thwart the Consortium throughout the sales process.

FACT: The core members of our Consortium have always consisted of the Dazheng Group and TF International. As is common market practice for investment companies, Dazheng Group solicited equity investors who were willing to participate in a transaction. Ascendent Capital participated in the same practice, and its financing contributions are also made by various equity partners. The Dazheng Group previously submitted three major equity partners to the Special Committee, all with well-executed equity commitment letters and sufficient proof of funding.

FACT: The changes in the funding structure are the result of the Special Committee’s demands and unfavorable treatment against the Consortium during the negotiation process. Demands from the Special Committee have gone beyond industry standards in financing commitments. The behavior displayed has included:

  1. Demanding a full “ring-fencing” arrangement of our equity participants, which is not a common market practice, and not something the Special Committee demanded of Ascendent Capital;
  2. At least one of the investors in the Consortium was approached by and made subject to intimidation tactics based on false legal foundations by Ascendent Capital, who was not supposed to be privy to the identity of the investor because it had only been disclosed to the Special Committee and its advisors;
  3. There have been constant pushbacks on due diligence requirements, delaying the process of confirming certain investors’ participation in the transaction due to their significant concerns about scarce diligence access;
  4. The Special Committee hired advisors who have a potential conflict of interest, despite being authorized to hire its own independent advisors – as noted by proxy advisor ISS; and
  5. Repetitive delay tactics of the Special Committee in negotiating fair acquisition terms.

These deliberate tactics used by the Special Committee have forced the Consortium to overcome inappropriate challenges in a take private deal, evidencing the Special Committee’s disingenuous efforts in this sale process, and the Consortium’s resilience in attempting to comply with these off-market and unreasonable conditions.

Furthermore, the criticism of Tony Chen, a Director at the Dazheng Group, and the leader of the Consortium, is inaccurate. Mr. Chen is a former investment banker and entrepreneur who co-founded one of the largest electric vehicle battery start-ups in China, and since then has become an individual investor who shares a similar background to his equity partners. The team working with Mr. Chen throughout the sales process includes extremely experienced financial and legal advisors.

The Consortium has an in-depth knowledge of Hollysys, having first announced its bid to acquire Hollysys on December 3, 2021, after undergoing a comprehensive analysis of the business and coming to the conclusion that Hollysys has not fully realized its potential. The Consortium was astonished by the poor corporate governance structure Hollysys possessed, which has resulted in the undervaluation of the equity.

FACT: Hollysys has a notorious history of poor corporate governance which all stakeholders have witnessed. Recently, both leading proxy advisors ISS and Glass Lewis came out AGAINST the transaction with Ascendent Capital. The proxy advisors raised several concerns regarding the process conducted by the Special Committee and the Board’s governance approach, particularly in relation to respecting shareholder rights. Issues with the corporate governance displayed by the Board include:

  1. The Board of Directors has never been subject to a shareholder election since 2010 and there has not been a shareholder meeting since;
  2. The poison pill has been in place since 2010 and was renewed without shareholder approval in 2020; and
  3. There is an extremely high threshold, and unduly onerous process, for shareholders to request the Board to convene a shareholder meeting.

The Board has a history of disenfranchising their shareholders which includes their behavior thus far in this opaque sales process. However, the Board has an opportunity to right its wrongs by putting the Consortium’s proposal to a shareholder vote.

The shareholders of Hollysys deserve a fair and independent sales process that truly seeks to maximize shareholder value. Unfortunately, the process adopted by the Special Committee is neither fair nor independent and demonstrably fails to maximize shareholder value. Leading proxy advisors ISS and Glass Lewis stated the following regarding the sales process and the Special Committee’s actions:

  • “Given the questionable effort to maximize price, the unreasonably high standard to which Ascendent’s main competitor has been held, and the inexplicably truncated process, votes against the proposed transaction are warranted.”
  • “When placed in full context, we believe there is vanishingly small cause for shareholders to endorse an arrangement derived from what we consider to be a flawed, low accountability process seemingly engineered in its later stages to blunt the shareholder franchise and trade potentially materially greater value for deference to a deal with Ascendent on an accelerated basis.”
  • “The Special Committee was authorized to hire its own independent advisors, but chose to use the advisors that the Board had already hired. In light of the potential conflict of interest created by CEO Changli Wang’s membership on the Board and his participation in a 2021 buyout effort, the Special Committee’s decision to use the same advisors is concerning.”

The Consortium reminds shareholders there is a better alternative to the proposed Ascendent deal. The Consortium’s most recent proposal is $29.50 per share, which is 11.3% higher than the proposed Ascendant deal. The Consortium will not be deterred in its efforts to acquire Hollysys. The Consortium urges all Hollysys shareholders to vote AGAINST the proposed Ascendent Capital transaction at the upcoming EGM on February 8, 2024 and to call upon the Board to convene a shareholders meeting to consider and, if thought fit, approve the Consortium’s proposal.

If the Ascendent transaction is not approved by shareholders and the Board fails to convene a timely shareholder meeting to put the Consortium’s proposal to shareholders, we will continue with the proceedings in the BVI court, which are still under foot, to obtain a court order requiring the Board to convene a shareholders meeting.

Yours sincerely,


By: /s/ Xiaogang (Tony) CHEN

Name: Xiaogang (Tony) CHEN

Title: Director

About Dazheng Group

Dazheng Group Acquisition Limited is a BVI-incorporated financial investor founded by sophisticated entrepreneurs and investment banking professionals.

About TFI

TFI Asset Management Limited is a Hong Kong-based asset management firm which is an indirect subsidiary of Tianfeng Securities Co., Ltd. (also known as TF Securities, SH: 601162).

Cautionary Statement Regarding Forward-looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “believe,” “envision,” “will,” “expect,” “anticipate,” “intend,” “estimate,” “plan” and similar expressions. Although the management of Dazheng Group, TFI and GA Technologies Limited believe that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of any of Dazheng Group, TFI and GA Technologies Limited, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Other than as required by applicable law, none of Dazheng Group, TFI and GA Technologies Limited undertakes any obligation to update or revise any forward-looking information or statements. The information and opinions contained herein do not take into account the particular investment objectives, financial situation, or needs of any recipient and should not be construed as an offer to buy or sell or the solicitation of an offer to buy or sell the securities mentioned or an invitation to the public. Under no circumstances shall the information contained herein or the opinions expressed herein constitute a personal recommendation to anyone.


Mr. Tony CHEN


Investor Contact
Okapi Partners LLC

Chuck Garske / Bruce Goldfarb

+1 (212) 297-0720


Media Contact
FTI Consulting


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