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Shanghai Stock Exchange delays shareholder vote ahead of deal

Exchange sends letter to Tianjin Tianhai asking for further details about the $6bn deal

The Shanghai Stock Exchange has thrown a spanner in the works, asking for more details about Tianjin Tianhai pending $6bn acquisition of Ingram Micro.

The exchange sent a letter to Tianjin Tianhai, a subsidiary of HNA Group, asking the company to disclose further details of how it is funding the acquisition, according to the Wall Street Journal. The stock exchange also wanted details about any post-deal exit plan for Chinese co-investors and other potenital risks that might come from the transaction.

The letter has forced Tianjin Tianhai to postpone its shareholder meeting to approve the deal, pushing it back to July 29. 

The $6bn was announced back in February. At the time, it was thought likely that any resistance would come from the US Committee on Foreign Investment in the United States (CFIUS). Trading of Tianjin Tianhai's shares has been suspended since the deal was announced.

The stock exchange highlighted Ingram Micro's steep fall in net profit in the first quarter, and requested an explanation for the dip in performance.

Fourth quarter sales came in at $11.3bn, down a whopping 19% in US dollars or 13% in constant currency. At the time, the company highlighted that last year's fourth quarter benefited from an extra $900m, thanks to an extra week of sales, as well as $500m from its US mobility distribution business, which it recently ditched due to profitability concerns. 

The exchange also wanted further information about the shareholder lawsuit filed that sought to terminate the deal. The investor, who  holds shares of Ingram Micro, filed the lawsuit alleging that Ingram breached their fiduciary duties owed to stockholders by agreeing to sell the company on the cheap. Despite the lawsuit, Ingram shareholders voted, almost unanimously, in favour of the deal.

According to the WSJ, the SSE also asked about the role of China International Capital Corp in the transaction.


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