China's Hollysys to consider $1.55 billion takeover bid, seek other offers

By Kannaki Deka and Yantoultra Ngui

(Reuters) -China's Hollysys Automation Technologies, which makes automation and control systems, said on Monday it had set up a committee to consider a $1.55 billion takeover offer from a consortium led by Recco Control Technology and Dazheng Group Investment Holdings and look at other offers.

The Beijing-based company has already received multiple other offers. If a sale goes ahead Nasdaq-listed Hollysys would follow other Chinese companies that have recently delisted from U.S. stock exchanges as their share prices looked undervalued due to geopolitical tensions between the United States and China over trade, technology and relations with Taiwan.

Hollysys offers integrated services for industrial automation and rail transport, according to its website, and its control systems have been used in sensitive areas such as nuclear power stations.

In August, a consortium led by Recco Control Technology and Dazheng Group Investment Holdings made an all-cash offer of $25 per share to buy the company.

The special committee will discuss the next steps with Recco Control and Dazheng Group (Hong Kong) in response to the offer to acquire the company, while expediting the process to seek "additional serious and compelling offers," Hollysys said in a statement.

Deutsche Bank will solicit additional potential offers on behalf of Hollysys, it added.

Besides the offer from Recco Control and Dazheng Group, Reuters reported last month that a consortium led by Hollysys' management planned to take the company private in a deal that would value it at $1.8 billion.

Separately, Hollysys said its board had engaged with shareholders who own 32.2% of the company following their push for a special meeting in August amid mounting frustration with the management for not starting a sale process.

The potential deal could also add to a growing list of U.S.-listed Chinese companies coming back to the mainland or Hong Kong in recent years as tensions mount between the two countries.

Five U.S.-listed Chinese state-owned companies, including oil majors Sinopec and PetroChina, said in August they would voluntarily delist from the New York stock exchange.

Shares of Hollysys, which listed in New York in 2008, have risen 20.8% this year, giving it a market value of some $1.23 billion, but analysts say it is undervalued compared to a few years ago or compared to peers listed in China.

Founded in 1993, Hollysys now has operations in China and eight other countries and regions throughout Asia.

It has carried out more than 45,000 projects in sectors ranging from power and petrochemicals to high-speed and urban rail, its website shows.

(Reporting by Kannaki Deka in Bengaluru and Yantoultra Ngui in Singapore; Editing by Anil D'Silva and Susan Fenton)