Shareco to make approximately RMB2.8 billion equity investment in GEE for up to 34.9% stake - The China IFEC market leader to expand its global footprint
Beijing, November 9, 2016 -- On November 9, Beijing Shareco Technologies Co., Ltd. (“Shareco”, NEEQ: 837676) and Global Eagle Entertainment Inc. ("GEE", NASDAQ: ENT) jointly announced that Shareco plans to acquire up to a 34.9% stake in GEE for approximately US$416mm, and would become GEE’s single largest shareholder post-transaction. Shareco and GEE also expect to form a China joint venture (the “China JV”), focusing on in-flight connectivity (“IFC”) and in-flight entertainment (“IFE”) services （collectively IFEC）.
Shareco’s expected investments and the creation of the China JV are planned to occur in two stages. Shareco has agreed to make an initial equity investment in GEE for 9.9% of the total outstanding shares and, subject to satisfaction of various conditions, then expects to increase its total stake up to 34.9% of the total outstanding shares via subscription to a primary share issuance and purchases via a tender offer for secondary shares.
Shareco, a subsidiary of HNA Group, is a technology company focusing on providing IFE and IFC services and is a pioneer and the leader in the sector in China. GEE is the third largest IFC solutions provider, the largest IFE content distributor and supplier, and the largest maritime satellite communications operator in the world.
This is the first cross-border investment for Shareco, a company listed on China’s National Equities Exchange and Quotations (“NEEQ”). According to Wind Information, China’s largest financial data supplier, the transaction is not only the first time a NEEQ-listed company would invest in a US public company, but also the largest cross-border investment ever done by any NEEQ-listed company. “There are significant synergies to be realized from this transaction and the investment will reinforce Shareco’s leading position in the domestic IFEC markets. The transaction will also facilitate the development of the Chinese IFEC market, and help GEE become the world's largest IFEC supplier,” said Jason Sun, the Chairman of Shareco.
“We are thrilled to partner with Shareco and HNA Group to drive new revenue opportunities and provide advanced connectivity and passenger entertainment services for HNA Group and the China market,” said Dave Davis, CEO of GEE.
The analysts point out: this investment case is perfectly in harmony agreement with the smart manufacturing planning of HNA. GEE offers a fully integrated suite of a series of avionics hardware equipment such as the satellite antenna, server, modem, and fairing in the global scope, provides advanced solutions for the traditional Internet world of aviation industry, to help airlines to break the information silos, make intelligent cabin become possible. This is a classic case of the effective integration of the hardware equipment and the typical application scenarios. This project of Shareco and Gee will become an important part of HNA smart manufacturing planning in the future.
Shareco is dedicated to the development of IFC technology and the operation of in-flight ecosystem. Currently, Shareco has signed contracts with 10 airlines, including Hainan Airlines, Capital Airlines, Tianjin Airlines and others. It has the right to retrofit and provide IFEC services to over 500 aircraft.
GEE currently serves over 750 aircraft across multiple airlines, including Southwest Airlines and Norwegian Air Shuttle, among others. GEE has close relationships with Hollywood, and has rights to a vast content library which enables GEE to maintain a leading position in the IFE sector. In addition, EMC, a wholly owned subsidiary of GEE, is the market leader in maritime internet services, and provides communication services to more than 1,600 ships, yachts and vessels around the world.
In addition to Shareco’s equity investments in GEE, both parties jointly announced the intention to form the China JV in the near future to provide the most advanced IFE and IFC services to China market. Upon signing of the China JV agreement, GEE would invest a certain amount of cash into the JV, with Shareco injecting most of its current business. Shareco will maintain a controlling stake in the joint venture.
The transaction will take 3-6 months to complete once the conditions are satisfied, upon which, Shareco would become the single largest shareholder of GEE and receive seats on the GEE board. Shareco and GEE will appoint together the key management team for the China JV, while Shareco will lead the China JV’s daily operations. The investments and the formation of the China JV will be subject to, among other things, shareholder and regulatory approval in both China and the US.
HNA Group has been very active in overseas acquisitions. Its recent transactions include the acquisition of Swissport International Ltd. (the world’s largest ground and air cargo services firm), and multiple investments into Aigle Azur, Ghana AWA Airlines Company, Virgin Airlines, Azul Brazilian Airlines, TAP Portugal and etc. HNA Group has extended its business along the value chain of global aviation industry.
Shareco’s investment into GEE will enable HNA Group to fully utilize its fleet resources to meet the increasingly diverse demands of its customers. Shareco’s core competence is to create an in-flight eco-system platform to deliver an unparalleled passenger experience. Furthermore, Shareco has been in collaboration with a number of key Internet players in China, including Didichuxing and LeSports, to co-develop products and services that will continue to enhance the in-flight passenger experience.
Moelis & Company is acting as exclusive financial advisor to Shareco, Sidley Austin LLP is acting as U.S. legal advisor to Shareco while Fangda Partners is acting as Shareco’s Chinese legal advisor.
BofA Merrill Lynch and Barclays are acting as financial advisors to GEE, and Simpson Thacher & Bartlett LLP is acting as legal advisor to GEE.
ABOUT SHARECO (NEEQ: 837676)
Founded in August, 2012, Beijing Shareco Technologies Co., Ltd. (“Shareco”) is a leading company in China’s in-flight entertainment and connectivity (“IFEC”) market. As China’s first unlisted public company in the IFEC industry, Shareco has substantial experience in providing in-flight entertainment related services to Chinese and international commercial airlines through in-flight connectivity, content on the tablets it distributes for passengers to use, and e-commerce, among other things. By building up an ecosystem in the cabin, Shareco connects the demands of passengers with business partners as providers, extending services during flight to non-flying time of passengers. It has contracts with over 10 airlines within China, with the possibility of connecting up to 1,000 aircraft. The company distributes tablets on more than 200 aircraft and more than 800 flights. The company is headquartered in Beijing, China. Find out more at: www.shareco.cn
Global Eagle Entertainment Inc. (NASDAQ: ENT) is a leading provider of satellite-based connectivity and media to fast-growing, global mobility markets across air, sea and land. Supported by proprietary and best-in-class technologies, GEE offers a fully integrated suite of rich media content and seamless connectivity solutions that cover the globe. With approximately 1,500 employees and 50 offices on six continents, GEE delivers exceptional service and rapid support to a diverse base of customers around the world. Find out more at: www.geemedia.com
About Beijing Shareco Technologies Co., Ltd. (Shareco)
Founded in August, 2012, Beijing Shareco Technologies Co., Ltd. has substantial experience in providing in-flight entertainment related services to Chinese and international commercial airlines through in-flight connectivity, content on the tablets it distributes for passengers to use, and e-commerce, among other things. By building up an ecosystem in the cabin, Shareco connects the demands of passengers with business partners as providers, extending services during flight to non-flying time of passengers. It has contracts with more than 10 airlines within China. It has planned to invest approximately $152.7 million to connect 100 aircraft within two years with the possibility of connecting up to 1,000 aircraft. The company distributes tablets on more than 200 aircraft and more than 800 flights. The company is headquartered in Beijing, China, with offices and teams located in Shenzhen and Shanghai.
Find out more at: www.shareco.cn Follow Shareco on Twitter：@SharecoTech
Chief Marketing Officer