Dalian Container Terminals Equity Integration was awarded Deal of the Year 2017 by the CBLG
This award is the outcome of the competitive evaluation and selection by the China Business Law Journal based on the importance, complexity, and innovation of this transaction, combined with market response and industry evaluation and other comprehensive factors.
Chen & Co. Law Firm was legal counsel for this equity integration, and was responsible for advising on all relevant legal issues. The deal was a merger of three container terminal operators. Dalian Port Container Terminal (DPCM) and Dalian International Container Terminal (DICT) were merged into Dalian Container Terminal (DCT), the existing entity after the merger. The deal was an equity integration in a real sense, which was expected to work more thoroughly and effectively than business integration. Addressing the problems resulting from state-owned enterprises’ (SOEs) fragmented approach to investing via multiple layers of entities, the deal also coincided with the trend of SOE reform. The deal posed quite a few challenges. With different equity and controlling structures, the three terminal operators had shareholders of diversified backgrounds, including central SOEs, local SOEs and foreign shareholders from Singapore, Denmark and Japan. Since the preferential tax policy applicable to the deal would expire on 31 December 2017, closing of the deal had to occur by November 2017, and the relevant tax filing procedures needed to be completed by the end of 2017. Moreover, antitrust clearance from the Ministry of Commerce would take at least two months. In light of the complicated equity structures of the terminal operators and the diverse interests of their shareholders, the team of Chen &Co. Law Firm needed to gain an understanding of the shareholders, including their style of doing things, past experience in dealing with similar transactions and their staffing for the proposed deal. The team also needed to know what fundamental interests the shareholders were seeking through the deal.