WSP Holdings Limited (WH), a China-based maker of seamless Oil Country Tubular Goods, Thursday agreed to be taken private by WSP OCTG GROUP Ltd. (Parent), a company owned by H.D.S. Investments LLC, and JM OCTG GROUP Ltd., a unit of Parent (Merger Sub), in a deal valued at about about $893.6 million, including the assumption of debt. The Merger is expected to close in the second quarter of 2013.
Following the news, shares of the company gained about 84 percent to trade at $2.94 on the New York Stock Exchange.
WSP Holdings said that, pursuant to the deal, each of its ordinary shares issued and outstanding immediately prior to the effective time of the Merger will be cancelled and cease to exist in exchange for the right to receive $0.32, and each American Depositary Share, which represents ten shares, will represent the right to surrender the ADS in exchange for $3.20 in cash.
The aforesaid criteria will not be applicable for shares held of record by Expert Master Holdings Limited, a firm owned by the company's CEO Longhua Piao, and UMW China Ventures (L) Ltd., which will be contributed to Parent immediately prior to the Merger in exchange for equity interests of Parent.
It will also not be applicable to shares owned by shareholders who have validly exercised and have not effectively withdrawn or lost their rights to dissent from the Merger, which will be cancelled for the right to payment of fair value of the Dissenting Shares.
The $0.32 per Share or $3.20 per ADS offer represents a premium of 60 percent over the company's closing price of $2.00 per ADS on December 12, 2011, the last trading day prior to the company's announcement of its receipt of a "going-private" proposal.
H.D.S. Investments LLC has provided the company with a limited guarantee in favor of the company guaranteeing the payment of certain monetary obligations of Parent and Merger Sub arising under the deal up to a capped amount.
H.D.S. Investments LLC has committed to contribute to Parent, and to cause Parent to contribute to Merger Sub, an equity investment in an amount sufficient to fund the deal and related expenses.
The company's Board approved the deal and resolved to recommend that its shareholders vote to authorize and approve it.
The deal is subject to the authorization and approval by an affirmative vote of shareholders representing at least two-thirds of the shares present and voting in person or by proxy as a single class at a meeting of the company's shareholders. EMH and UMW, who collectively beneficially own sufficient shares, have agreed to vote in favor of the deal.
If completed, the deal will result in the company becoming a privately-held company and its ADSs will no longer be listed on the NYSE.
Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee, Kirkland & Ellis is serving as U.S. legal advisor to the Special Committee, and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Special Committee. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP is serving as legal advisor to H.D.S. Investment LLC.
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