SHANGHAI, May 16, 2022
/PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG)
("GHG" or the "Company"), a leading hospitality management group in
China, today announced that it has
entered into a definitive agreement (the "Sale and Purchase
Agreement") to acquire Da Niang Dumplings and Bellagio, two leading
restaurant chain businesses in China (collectively, the "Target Businesses"),
from GreenTree Inns Hotel Management Group, Inc. ("GTI"), the
Company's controlling shareholder, and a letter agreement (the
"Letter Agreement") in relation to the Sale and Purchase Agreement.
The Company previously announced receipt of the non-binding
proposal from GTI to sell the Target Businesses to the Company in
its press release dated April 29,
2022.
Pursuant to the Sale and Purchase Agreement, GHG will acquire
all of the issued and outstanding shares in Gen-Spring Limited, which at closing will own (i)
all of the issued and outstanding equity interests in the Da Niang
Dumplings business, and (ii) approximately 83.9% of the issued and
outstanding equity interests in the Bellagio business, for an
aggregate purchase price equal to the USD equivalent of
RMB399,800,000 (the "Proposed
Acquisition"). The Sale and Purchase Agreement contains
representations, warranties, covenants and undertakings customary
for a transaction of similar nature, as well as indemnity in favor
of the Company for certain specified matters. Pursuant to the
Letter Agreement, if the aggregate audited net income of the Target
Businesses for fiscal years 2022 through 2026 (both inclusive)
(excluding non-recurring items) is less than USD20,000,000, GTI will compensate the Company
for such shortfall up to USD20,000,000.
The board of directors of GHG formed a special committee (the
"Special Committee") consisting solely of disinterested independent
directors to consider the Proposed Acquisition. With the assistance
of its own independent financial and legal advisors, the Special
Committee assessed the Proposed Acquisition and conducted
arm's-length negotiations with GTI in relation to the Proposed
Acquisition. The Special Committee has received from Kroll, LLC a
written opinion to the effect that, as of the date of such opinion
and subject to the limitations, qualifications and assumptions set
forth therein, the consideration to be paid by the Company under
the Sale and Purchase Agreement is fair, from a financial point of
view, to the Company. Acting upon the unanimous recommendation of
the Special Committee, the board of directors of GHG approved the
Proposed Acquisition.
Commenting on the Proposed Acquisition, Alex Xu, chief executive officer of the Company,
said: "We are excited to announce the proposed acquisition of Da
Niang Dumplings and Bellagio, both of which are differentiated and
well-loved restaurant brands appealing to a wide range of customer
demographics in China. This
transaction will enable GHG to enter the large and fast-growing
food service industry in China,
further diversifying our business and bringing complementary
services, resources, and revenue streams to our Company. We believe
that Da Niang Dumplings and Bellagio are well-positioned to benefit
from the increasing consumer demand for service of quality food and
leverage upon our unique ecosystem, highly effective and scalable
franchise management system and hotel network to provide quality
services to the public. We see a lot of synergies between our team
and the highly experienced teams of Da Niang Dumplings and
Bellagio. The proposed acquisition is fully in line with our
strategy to deliver profitable and sustainable growth and strong
value creation for our shareholders."
Fred Lin, managing director of
the Target Businesses, commented: "GreenTree Hospitality Group's
acquisition of Da Niang Dumplings and Bellagio marks a new era of
growth for the two brands. Our two restaurant brands will
greatly benefit from GHG's rapid and successful franchise
networking experience. Both Da Niang Dumplings and Bellagio
are proven brands in China's
evolving marketplace. We will take this opportunity to not only
grow our business but also strengthen our management and corporate
culture with GHG."
The closing of the Proposed Acquisition is subject to the
satisfaction or waiver of customary closing conditions, and is
currently expected to occur in the second half of 2022. GTI and its
subsidiaries (other than the Target Businesses) are expected to
repay in full all outstanding payables due to the Company and its
subsidiaries upon closing of the Proposed Acquisition through
offset against the purchase price to be paid by the Company, on the
consolidated basis.
Kroll, LLC, operating through its Duff & Phelps Opinions
Practice, is serving as financial advisor to the Special Committee
in connection with the Proposed Acquisition. Simpson Thacher &
Bartlett LLP is serving as international legal counsel to the
Special Committee and Beijing Zhonglun W&D Law Firm is serving
as PRC legal counsel to the Special Committee in connection with
the Proposed Acquisition. Ernst & Young (China) Advisory Limited assisted the Special
Committee on financial due diligence matters.
About Da Niang Dumplings, Bellagio and the Proposed
Acquisition
GHG has been exploring new growth opportunities to expand its
business and create value for its shareholders. In addition to
expanding its hotel network and diversifying its brand portfolio,
GHG seeks to launch new service offerings that are complementary to
its existing hotel business. The Proposed Acquisition is expected
to drive growth in GHG's business and improve its financial
performance.
Da Niang Dumplings and Bellagio focus on offering healthy and
affordable fast food and casual dining services to mass consumers
and generated a combined unaudited revenue of about RMB740,000,000 in 2021. Since demand for such
food services is more stable and less dependent on discretionary
spending as compared with GHG's existing hotel services, GHG
expects the Target Businesses to provide a more stable revenue
stream that may offset cyclical aspects of its hotel business. The
restaurant and hotel businesses are also complementary in nature as
GHG witnesses increasing demand for food-related services in the
local communities it serves, and GHG expects cross-selling
opportunities to arise from the two businesses. After completion of
the Proposed Acquisition, GHG expects the Target Businesses and its
existing business to share common resources, achieve economies of
scale and improve the Company's overall operating performance. The
Proposed Acquisition will also enable all of GHG's shareholders to
share in the synergistic growth of the hotel and restaurant
businesses.
Da Niang Dumplings
Da Niang Dumplings is a leading quick service restaurant chain
in China, with restaurants
covering 297 locations in 40 cities as of December 31, 2021. As of December 31, 2021, the chain comprises of 160
self-operated restaurants and 137 franchised restaurants.
Bellagio
Bellagio is a leading casual dining restaurant chain focusing on
the Chinese market, with restaurants covering 39 locations in more
than 14 cities as of December 31,
2021, including in mainland China, Macao
and Southeast Asia. As of
December 31, 2021, the chain
comprises of 31 self-operated restaurants and 8 franchised
restaurants.
About GHG
GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company")
(NYSE: GHG) is a leading hospitality management group in
China. As of December 31, 2021, GreenTree had a total number
of 4,659 hotels. In 2020, HOTELS magazine ranked GreenTree Top 12
Ranking among 225 largest global hotel groups in terms of number of
hotels in its annual HOTELS' 225. GreenTree was also the fourth
largest hospitality company in China in 2020 based on the statistics issued
by the China Hospitality Association.
GreenTree has built a strong suite of brands including its
flagship "GreenTree Inns" brand as a result of its long-standing
dedication to the hospitality industry in China and consistent quality of its services,
signature hotel designs, broad geographic coverage and convenient
locations. GreenTree has further expanded its brand portfolio into
mid-to-up-scale and luxury segments through a series of strategic
investments. By offering diverse brands, through its strong
membership base, expansive booking network, superior system
management with moderate charges, and fully supported by its
operating departments including Decoration, Engineering,
Purchasing, Operation, IT and Finance, GreenTree aims to keep
closer relationships with all of its clients and partners by
providing a brand portfolio that features comfort, style and
value.
For more information on GreenTree, please visit
http://ir.998.com
Safe Harbor Statements
This press release contains forward-looking statements made
under the "safe harbor" provisions of Section 21E of the Securities
Exchange Act of 1934, as amended, and the U.S. Private Securities
Litigation Reform Act of 1995. In some cases, these forward-looking
statements can be identified by words or phrases such as "may,"
"will," "expect," "anticipate," "aim," "estimate," "intend,"
"plan," "believe," "potential," "continue," "is/are likely to,"
"confident," "future," or other similar expressions. GreenTree may
also make written or oral forward-looking statements in its reports
filed with or furnished to the U.S. Securities and Exchange
Commission, in its annual report to shareholders, in press releases
and other written materials and in oral statements made by its
officers, directors or employees to third parties. Any statements
that are not historical facts, including statements about or based
on GreenTree's current beliefs, expectations, assumptions,
estimates and projections about us and our industry, are
forward-looking statements that involve known and unknown factors,
risks and uncertainties that may cause our actual results,
performance or achievements to be materially different from those
expressed or implied by the forward-looking statements. Such
factors and risks include, but not limited to the following: the
expected closing and the benefits of the Proposed Acquisition;
synergies generated by such acquisition; any expected growth in the
Company's hospitality business; any expected growth in the quick
service restaurant chains operated by the Target Businesses; and
opportunities for further growth; GreenTree's goals and growth
strategies; its future business development, financial condition
and results of operations; trends in the hospitality and food and
beverage industries in China and
globally; competition in our industries; fluctuations in general
economic and business conditions in China and other regions where we operate; the
regulatory environment in which we and our franchisees operate; the
impact of any further resurgences of COVID-19 on any of the
foregoing; and assumptions underlying or related to any of the
foregoing. You should not place undue reliance on these
forward-looking statements. Further information regarding these and
other risks, uncertainties or factors is included in the Company's
filings with the U.S. Securities and Exchange Commission. All
information provided, including the forward-looking statements
made, in this press release are current as of the date of the press
release. Except as required by law, GreenTree undertakes no
obligation to update any such information or forward-looking
statements to reflect events or circumstances after the date on
which the information is provided or statements are made, or to
reflect the occurrence of unanticipated events.
GreenTree
Ms. Selina
Yang
Phone: +86-21-3617-4886 ext. 7015
E-mail: ir@998.com
Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com
Christensen
In Shanghai
Mr. Jerry Xu
Phone: +86-138-1680-0706
E-mail: jxu@christensenir.com
In Hong Kong
Ms. Karen Hui
Phone: +852-9266-4140
E-mail: khui@christensenIR.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
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SOURCE GreenTree Hospitality Group Ltd.