Chinese testing company ATA Inc. said Feb. 6 that it has entered into a share purchase agreement with a group of investors to sell its wholly owned subsidiary ATA Online for a total consideration of $200 million in cash.
Under the agreement, the investors, which include New Beauty Holdings Ltd., a company controlled by ATA Chairman and CEO Kevin Xiaofeng Ma and four holding companies controlled by certain management members of ATA Online, agreed to buy all the outstanding shares of ATA Online for the total consideration. Two entities affiliated with funds managed by private equity firm CDH Investments and a Chinese alternative asset management firm based in Beijing are also among the investors.
Ma will pay a cash deposit of $20 million to ATA as security for the payment of the deal amount, ATA said.
The Beijing-based company said ATA Online accounted for approximately 98% of ATA's revenue. The transaction amount represents an 87.4% premium over ATA's market capitalization.
The company expects to close the deal in three stages, the first of which is expected to close in the third quarter of 2018.
A special committee was formed by the company's board in August 2017 to determine the deal. The committee negotiated an increase in the deal amount to $200 million from $150 million, which had been proposed earlier, according to the company. ATA's board approved the transaction and the share purchase agreement Feb. 6.
Financial adviser Duff & Phelps Securities LLC and Duff & Phelps LLC along with legal counsel Morgan Lewis & Bockius LLP assisted the committee in evaluating the deal.
ATA intends to use the net proceeds from the transaction to develop its existing business and fund potential merger and acquisition deals in the education sector. When the deal is completed, ATA will terminate its testing development and delivery business that ATA Online operates.
