Homeinns Merger

China's Homeinns To Merge with BTG Hotels Group

Homeinns Hotel Group

Homeinns Hotel Group (NASDAQ: HMIN), a leading economy hotel chain in China, today announced that it has entered into a definitive Agreement and Plan of Merger with BTG Hotels Group (HONGKONG) Holdings Co., Limited, a wholly owned subsidiary of BTG Hotels (Group) Co., Ltd., a PRC joint stock company that is listed on the Shanghai Stock Exchange and principally engaged in the management of hotels and tourism destinations (SHA: 600258), BTG Hotels Group (CAYMAN) Holding Co., Ltd, a wholly owned subsidiary of Holdco, and solely for the purposes of certain sections of the Merger Agreement, BTG Hotels.

Pursuant to the Merger Agreement, Holdco will acquire the Company (other than Rollover Shares as defined below) for cash consideration of US$17.90 in cash per ordinary share of the Company (each, a "Share") or US$35.80 in cash per American depositary share of the Company (each, an "ADS"), each of which represents two Shares. This represents an 18.7% premium over the closing price of US$30.17 per ADS as quoted by the NASDAQ Global Market on June 10, 2015, and a premium of 29.4% and 36.6%, respectively, over the Company's 30- and 60- trading day volume-weighted average price as quoted by the NASDAQ prior to June 10, 2015, the last trading day prior to the Company's announcement on June 11, 2015 that it had received a non-binding "going private" proposal from the buyer group (the "Buyer Group") comprised of BTG Hotels, Poly Victory Investments Limited ("Poly Victory"), Ctrip.com International, Ltd. ("Ctrip"), Neil Nanpeng Shen, Co-Founder and Co-Chairman of the Board of Directors of the Company, James Jianzhang Liang, Co-Founder and Director of the Company and Chairman of the Board of Directors and Chief Executive Officer of Ctrip, and David Jian Sun, Chief Executive Officer and Director of the Company. The merger consideration also represents an increase of approximately 9.1% from the original US$32.81 per ADS and US$16.405 per Share offer price in the Buyer Group's non-binding "going private" proposal dated June 11, 2015.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the merger (the "Effective Time"), Merger Sub will merge with and into the Company, with the Company surviving the merger as the surviving company (the "Surviving Company") under Cayman Islands law (the "Merger"), and each Share issued and outstanding immediately prior to the Effective Time, will be cancelled and cease to exist in exchange for the right to receive cash consideration equal to US$17.90, and each ADS will be cancelled in exchange for the right to receive cash consideration of US$35.80 per ADS, in each case, without interest and net of any applicable withholding taxes, except for (i) certain of the Shares (the "Rollover Shares") held by Poly Victory, Ctrip Travel Information Technology (Shanghai) Co., Ltd., a wholly owned subsidiary of Ctrip, Neil Nanpeng Shen, Smart Master International Limited, David Jian Sun, Peach Unity Investments Limited, Jason Xiangxin Zong, President and Chief Operating Officer of the Company, and Wise Kingdom Group Limited (collectively, the "Rollover Shareholders"), (ii) Shares (including Shares represented by ADSs) held immediately prior to the Effective Time by the Company or any of its subsidiaries or by the Company's ADS depositary and reserved for future issuance under the Company's share incentive plan, which Shares will be cancelled without payment of any consideration or distribution therefor, and (iii) Shares held by holders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the Merger pursuant to Section 238 of the Companies Law of the Cayman Islands, which Shares will be cancelled at the Effective Time of the Merger for the right to receive the fair value of such Shares determined in accordance with the provisions of Section 238 of the Companies Law of the Cayman Islands. At the Effective Time, all of the Rollover Shares will be converted into ordinary shares of the Surviving Company.

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As of the date of the Merger Agreement, the Rollover Shareholders beneficially own in aggregate approximately 34.9% of the issued and outstanding Shares.

BTG Hotels and Holdco intend to fund the Merger through the proceeds from a committed loan facility of up to US$1.2 billion from Industrial and Commercial Bank of China Limited, New York Branch, pursuant to a debt commitment letter.

The Company's board of directors, acting upon the unanimous recommendation of the special committee formed by the board of directors (the "Special Committee"), unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement (the "Transactions"), including the Merger, and resolved to recommend that the Company's shareholders authorize and approve the Merger Agreement and the Transactions, including the Merger. The Special Committee, which is comprised solely of independent directors of the Company who are unaffiliated with Holdco, Merger Sub or any member of the Buyer Group or management of the Company, exclusively negotiated the terms of the Merger Agreement with the Buyer Group with the assistance of its independent financial and legal advisors.

The Merger is subject to receipt of certain required regulatory approvals specified in the Merger Agreement and is currently expected to close during the first half of 2016. It is also subject to the approval of the Company's shareholders, the approval of BTG Hotels' shareholders, as well as certain other customary closing conditions. Pursuant to the Merger Agreement, the approval of the Merger Agreement and the Transactions by the Company's shareholders requires both (i) a special resolution in accordance with Cayman Islands law by the affirmative vote of holders of Shares representing at least two-thirds of the Shares present and voting in person or by proxy at a meeting of the Company's shareholders (the "Company Shareholders' Meeting"), and (ii) so long as the Shares (excluding Shares held by the Rollover Shareholders) present and voting in person or by proxy at the Company Shareholders' Meeting exceed 50% of all of the issued and outstanding Shares of the Company as of the close of business on the record date established for the Company Shareholders' Meeting, the affirmative vote of holders of shares representing more than 50% of the Shares (excluding the Shares held by the Rollover Shareholders) in person or by proxy at the Company Shareholders' Meeting.

Concurrently with the execution of the Merger Agreement, BTG Hotels, Holdco and the Rollover Shareholders entered into a Support Agreement, pursuant to which the Rollover Shareholders have agreed (i) to vote all of their respective Shares in favor of the authorization and approval of the Merger Agreement and the Merger and (ii) to receive no cash consideration in the Merger with respect to the Rollover Shares.

The Company and certain other participants in the Transactions will prepare and file with the U.S. Securities and Exchange Commission (the "SEC") a Schedule 13E-3 transaction statement, which will include a proxy statement of the Company. The Schedule 13E-3 will include a description of the Merger Agreement and contain other important information about the Transactions, the Company and the other participants in the Transactions.

Credit Suisse Securities (USA) LLC is serving as the financial advisor to the Special Committee, Simpson Thacher & Bartlett LLP is serving as U.S. legal counsel to the Special Committee, Maples and Calder is serving as Cayman Islands legal counsel to the Special Committee and the Company, and Fangda Partners is serving as PRC legal counsel to the Special Committee. O'Melveny & Myers LLP is serving as U.S. legal counsel to the Company, and Commerce & Finance Law Offices is serving as PRC legal counsel to the Company.

Huatai United Securities Co., Ltd., CITIC Securities Co., Ltd. and UBS AG Hong Kong Branch are serving as the financial advisors to the Buyer Group. Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal counsel to the Buyer Group, Jun He Law Offices and East & Concord Partners are serving as PRC legal counsel to the Buyer Group, and Walkers is serving as Cayman Islands legal counsel to the Buyer Group. 



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