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Kamis, 14 November 2019 09:32:00

ASL Intends to Spin Off U.S. Business with a Valuation of Approximately HK$3 Billion Listed on Nasdaq

Demonstrate The Outstanding Capital Operating Capability
Represent An Important Step Forward In Implementing The Group's Regional Development Strategy
 
HONG KONG, - 14 November 2019 - Automated Systems Holdings Limited ("ASL" or "the Group") (HKEX stock code: 771), a trustworthy and professional global Information Technology ("IT") partner, is pleased to announce the spin-off of Grid Dynamics International, Inc. ("Grid Dynamics"), the Group's U.S. and Europe business, with a valuation of approximately US$390.1 million (approximately HK$3,042.8 million).

Grid Dynamics is expected to be listed on Nasdaq via ChaSerg Technology Acquisition Corp. ("ChaSerg") (NASDAQ: CTAC), a listed company on Nasdaq ("Nasdaq"), with a structure of a reverse triangular merger followed immediately by a forward triangular merger.  

Signing ceremony signifies a brighter future for ASL, Grid Dynamics & Teamsun
In this transaction, 100% equity interest in Grid Dynamics will be injected into ChaSerg by way of merger, and the merger consideration payable by ChaSerg will be in two forms, namely cash and new shares issued by ChaSerg.

The cash to share payment ratio will be approximately 33.3% to 66.7%, and will be adjusted according to the terms of merger agreement. Upon completion of the transaction, ASL will be entitled to receive close to US$93.6 million (approximately HK$730.6 million) in cash and approximately 34% of ChaSerg's marketable shares (on fully diluted basis), and expects to record approximately US$88.5 million (approximately HK$690.3 million) investment gain.

The figures above will be adjusted according to the terms of merger agreement. In addition, Grid Dynamics itself will receive nearly US$80 million (approximately HK$624.0 million) after the completion of transaction. Meanwhile, upon the closing, Grid Dynamics will replace ChaSerg to  be listed on Nasdaq under the name of Grid Dynamics Holding (stock trading code to be determined).
 
Mr. Leon Wang, Chief Executive Officer and Executive Director of ASL said, "Grid Dynamics after being acquired by ASL as a wholly-owned subsidiary in 2017 for US$118.0 million (approximately HK$920.4 million), its financial performance has been growing, with an increase in revenue and EBITDA at around 30% in these few years, and the EBITDA margin remained stable at 25%. At the same time, the Group has continued the Research & Development ("R&D") investment in two areas - machine learning and artificial intelligence - for the recent two years to enhance technical capabilities of Grid Dynamics. In this transaction, the valuation of Grid Dynamics is about 3 times higher than that at the time of the acquisition, which shows that its value is fully recognized by the market."
 
The transaction involves three of the world's first-tier securities exchanges, including the NASDAQ Stock Market, the Hong Kong Stock Exchange and the Shanghai Stock Exchange. The transaction processes are required to follow different listing regulations and manage different compliance procedures. Meanwhile, because Grid Dynamics has operations in several countries in Europe and U.S., it also has to comply with the regulations under the legal system of multiple countries, and the overall transaction complexity is high.
 
Mr. Leon Wang added, "The two major directions of the Group's future development are to build on digital transformation and to strengthen the Group's position as an unified technology services provider by integrating technology with customer applications internally, and by extending development beyond Hong Kong externally. The spin-off of Grid Dynamics is an important step forward in implementing the regional development strategy, and in addition to expanding Grid Dynamics' overseas business development potential.

Furthermore, the Group is also recovering significant investments costs through this capital operation to further advance future business development in the Asia-Pacific region. After the transaction, the Group will have sufficient cash with sharply decreased debt pressure and improved ability to distribute special dividends and repurchase shares. At the same time, the Group's profit is expected to increase in the coming future and it is very likely for the Group to increase the dividend payout ratio and bring higher returns to shareholders."
 
Mr. Wang Weihang, Chairman of the Board of Directors of ASL expressed, "Facing global economic pressures and geopolitical risks, this transaction, on the one hand, balances macro risks with the benefits of ASL's development. On the other hand, Grid Dynamics will be able to leverage the capital market for merger and acquisition for cross-sector and cross-border business expansion, enlarging its development potential in the European and U.S. markets, thereby further enhancing the market value of Grid Dynamics.

It is reported that among the companies listed on the Hong Kong Main Board, the Group is one of the few local IT enterprises. After the completion of the transaction, it is believed that the Group is the only Hong Kong local technology enterprise whose business is listed on Nasdaq, which will become a classic case of capital operation in Hong Kong's IT industry."
 
Upon completion, Grid Dynamics will become an associate of the Group, and the Group is also its single largest shareholder. Grid Dynamics will continue its planned business cooperation strategy and synergise with the Group's Asia-Pacific operation, including project-level collaboration and technology integration and acquisition.

The Group will focus on industries with a competitive edge, further enchancing its integration service provider's technical capabilities to strengthen its market positioning and to connect leading technologies with innovative products and business applications. In addition, it will continue to provide one-stop global IT services to Belt and Road enterprises. (*).