Belle – EGM for privatization vote will be held on 17 July 2017
Belle dispatched a circular after the market closed on Friday. According to thecircular, a court meeting and an EGM will be held at 9:30am and 10:00am,respectively, on 17 July 2017. The results will be announced after themeetings. Details of the timetable （possibly to be changed） are set out below.
　　To recap, approval of the deal mainly needs the following conditions:
　　1） The approval of deal needs to be voted for by a majority ofshareholders （>50%） who hold at least 75% in value of the shares,either in person or by proxy;
　　2） The number of against votes needs to be no greater than 10%.
　　An independent advisor recommended independent shareholders should votefor the proposal given the need for the company to transform, which may ormay not succeed, given equity investor group’s experience in e-commerce andnew retail model, and that if this proposal is not approved, shareholders shouldnot expect another one in the future. It believes that the price is fair based oncomparable valuation （EV/EBITDA and PE）， and comparable transactions.
　　Deutsche Bank view
　　We believe it is highly likely that the deal will be approved although we do notregard the offer price as particularly attractive. While the offer price represents7.7x EV/EBITDA （which is higher than the sector average）， the sector averageof 7.4x is based on seven companies with market caps ranging from HK$1.3bnto HK$64bn. However, we agree that a transformation （which is needed） mightresult in short-term profit volatility and thus the interests of management andinvestors might be aligned should the company remain a listed company.