Recently, Hollysys Automation Technologies announced the formation of a special committee to deal with the recent acquisition offers received, and announced that it will also consider other offers. The announcement comes after Hollysys said its board had been in contact with shareholders holding 32.2 percent of the company, who pushed for an extraordinary meeting in August to express their dissatisfaction with management for not starting the sale process.

According to industry sources, Shangda Capital and another leader in the domestic automation (DCS) industry, Zhejiang Zhongcong or have reached an agreement to compete for peace and interests, and actively contact domestic banks to apply for merger and acquisition loans. This possibility has aroused widespread concern in the industry. Due to Shangda Capital in 2021, it jointly proposed the former privatization transaction with the company’s management, but failed to succeed, and there was a misunderstanding with the company’s management. Industry insiders pointed out that Shangda Capital turned to join hands with its competitors in the industry, this action shows the determination of foreign-funded Shangda Capital acquisition, and also highlights its sideways jump from the company to the market.

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It is understood that as an internationally renowned overseas US fund, Shangda Capital participated in the privatization transaction of China Automation Group, a Hong Kong-listed company, at the end of 2019, and has accumulated certain experience and resources in the automation industry. In July 2021, Shangda Capital submitted a privatization offer together with Hollysys founder Wang Changli. Two years later, Shangda Capital restarted the acquisition, and joined hands with another leading Chinese automation, showing the acquisition determination while causing the market to question its left and right jumping method, “After all, Shangda Capital is a small number of buyers who may be familiar with the internal management of Hollysys.” After Wang Changli returned to the company and announced that he would not consider any external offers, Shangda Capital chose to cooperate with Hollysys’s biggest competitor, Zhongcong Technology, and the layout and position behind this series of operations appear to be confusing.” Industry insiders commented.

Although the details of the joint acquisition have not yet been announced, according to people familiar with the matter, Shangda Capital and Zhejiang Zhongkong have reached a consensus on the acquisition.

In the view of the industry, the reason why this round of acquisition has triggered a hot discussion in the industry, on the one hand, the combination of Shangda Capital and Zhejiang Zhongcong or will further consolidate their position in the automation industry, forming a stronger strength. On the other hand, Shangda Capital holds the privatized former Hong Kong stock China Automation Group, competing for harmony, integrating Zhejiang Zhongkong, and realizing the integration of China’s third-year automation industry leader, whether it will form a monopoly and affect fair market competition, causing concern in the industry. Therefore, it is necessary to continue to closely monitor the progress of this acquisition and assess its impact on the future development of the market and the industry, especially the attitude towards antitrust.