BEIJING, Oct. 24, 2020 /PRNewswire/ -- Lianluo Smart
Limited ("LLIT" or the "Company") (NASDAQ: LLIT), and
privately-held Newegg Inc. ("Newegg") today jointly announced that
they have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), whereby the stockholders of Newegg will become the
majority owners of LLIT, as a result of the merger of Lightning
Delaware Sub, Inc. (the "Merger Sub"), LLIT's wholly owned
subsidiary, with and into Newegg. In addition, LLIT will sell
its equity holdings in Lianluo Connection Medical Wearable Device
Technology (Beijing) Co., Ltd.
("Lianluo Connection") to Beijing Fenjin Times Technology
Development Co., Ltd ("Fenjin
Times") pursuant to an equity transfer agreement
("Disposition Agreement"). The disposition will become effective
immediately following completion of the Merger.
Concurrent with the closing of the merger and disposition
described above (collectively, the "Restructure"), the Company will
conduct a public offering of its common shares with expected gross
proceeds of approximately $30 million
(the "Financing"). The consummation of the Restructure and the
Financing are contingent on the closing of each other transaction
and certain customary approvals and conditions. LLIT will seek its
shareholders' approval of the Restructure as well as an amendment
to its memorandum and articles of association to eliminate its dual
class share structure, to effectuate a reverse share split if
needed to meet Nasdaq's initial listing requirements, to increase
the number of its authorized shares and to effectuate a name
change.
LLIT's Class A common shares are currently traded on Nasdaq
under the symbol "LLIT". In connection with the closing of the
Restructure and the Financing, LLIT intends to change its name to
"Newegg Commerce, Inc." and remain Nasdaq-listed under a new ticker
symbol. Upon completion of the merger, the board of directors
and officers of LLIT will be replaced by the board of directors and
officers of Newegg.
Newegg is a leading e-commerce company in North America offering direct sales and an
online marketplace platform for consumer electronics,
entertainment, smart home and gaming products and provides certain
third-party logistics services and marketing services globally.
"Over the course of nearly two decades, Newegg built a highly
reputable and widely recognized name in the tech-focused ecommerce
market. As we prepare to become a publicly traded company, we are
well positioned to build on this foundation to take Newegg to the
next level," said Anthony Chow,
Global CEO of Newegg. "Combining our deep market expertise in
ecommerce and leadership in technology, we are structured and
prepared to capitalize on new strategic initiatives and
partnerships."
Key Terms of the Transactions
Merger
Under the terms of the Merger Agreement, the Merger Sub will
merge with and into Newegg, with Newegg surviving the merger as a
wholly-owned subsidiary of LLIT. Upon completion of the merger, the
Class B common shares of LLIT will be eliminated and LLIT will only
have one class of securities, which will be referred to as common
shares. The holder of all outstanding Class B common shares and
warrants has elected to convert those shares into the same number
of common shares and amend those warrants to be exercisable for the
same number of common shares at the same aggregate exercise price,
effective immediately prior to completion of the merger. Pursuant
to the Merger Agreement, LLIT will issue approximately 363,325,542
common shares to the Newegg stockholders as the merger
consideration.
It is anticipated that immediately upon completion of the
merger, Newegg's current stockholders will have an ownership
interest of approximately 99.02%, and LLIT's existing shareholders
will own approximately 0.98%, of the post-merger company. The above
ownership percentages do not take into account the Company's
proposed Financing of common shares that is contemplated to take
place concurrently with the Restructure.
Disposition
Simultaneously with the execution of the Merger Agreement, the
Company entered into the Disposition Agreement with Fenjin Times. Pursuant to the Disposition
Agreement, the Company will sell all of the equity interest in its
sole operating subsidiary, Lianluo Connection to Fenjin Times for cash consideration of
$0. In addition, as the new owner of
Lianluo Connection, Fenjin Times is
obligated to make a contribution of RMB87.784 million to Lianluo Connection's
registered capital by September 23,
2023 in accordance with the articles of association of
Lianluo Connection. The Company also agreed to convert the
debt owed by Lianluo Connection to the Company in the aggregate
amount of $11,255,188 into additional
paid-in capital of Lianluo Connection. Upon completion of
this disposition, Lianluo Connection will be 100% owned by
Fenjin Times.
Approvals, Opinions and Conditions
The Company will seek its shareholders' approval of the
Restructure as well as other related proposals including the
elimination of its dual class structure, an increase of the
authorized shares, share combination, name change, and amendment of
its memorandum and articles of association.
The proposed Restructure has been unanimously approved by the
board of directors of LLIT. The Merger Agreement was also
approved by all of the board members of Newegg and adopted by a
majority of holders of each class of outstanding capital stock of
Newegg. Since Hangzhou Lianluo Interactive Technology Co., Ltd.
("Hangzhou Lianluo") is the direct or indirect controlling
shareholder of both LLIT and Newegg, the proposed Restructure has
been unanimously approved by the special committee of board of
directors of LLIT and the proposed Merger Agreement has been
unanimously approved by the special committee of the board of
directors of Newegg.
The Benchmark Company, LLC ("Benchmark") is acting as financial
advisor to the Company. Benchmark provided a fairness opinion
indicating that the merger consideration to be paid by the Company
is fair to the shareholders of LLIT from a financial point of view
and another fairness opinion indicating that the consideration to
be received by the Company in the disposition is fair to the
shareholders of LLIT from a financial point of view.
Completion of the Restructure and the Financing is subject to a
number of conditions, including, without limitation, approval by
LLIT's shareholders, satisfaction of NASDAQ initial listing
requirements, certain third party consents, a registration
statement on Form F-4 for the LLIT shares being issued as merger
consideration being declared effective by the Securities and
Exchange Commission (the "SEC") and the satisfaction or waiver of
other customary closing conditions. Once the Form F-4 has
been declared effective by the SEC, the Company intends to set a
date for a special meeting for its shareholders to approve the
proposals associated with the Restructure as well as other related
proposals described above, and deliver the final notice of
shareholders meeting to its shareholders.
About Lianluo Smart Limited
Lianluo Smart Limited (Nasdaq: LLIT) is a professional smart
service and products provider, which designs, develops and markets
its own branded medical products and medical components in
China.
About Newegg Inc.
Newegg, headquartered in the City of
Industry, California, is a leading e-commerce company
offering direct sales and an online marketplace platform for IT
computer components, consumer electronics, entertainment, smart
home and gaming products and provides certain third-party logistics
services globally. For more information, please
visit https://www.newegg.com/
Advisors
Bevilacqua PLLC is acting as legal counsel to LLIT while Kaufman
& Canoles, P.C. is acting as legal counsel to the special
committee of LLIT. Hunter Taubman
Fischer & Li LLC is acting as legal counsel to Newegg
while Gibson, Dunn & Crutcher LLP served as legal counsel to
the special committee of Newegg.
Forward Looking Statements
This press release includes "forward-looking statements" within
the meaning of U.S. federal securities laws. Words such as
"expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "continue" and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements involve significant
risks and uncertainties that could cause the actual results to
differ materially from the expected results and, consequently, you
should not rely on these forward-looking statements as predictions
of future events. These forward-looking statements and factors that
may cause such differences include, without limitation, LLIT's and
Newegg' expectations with respect to future performance, growth and
anticipated acquisitions; the anticipated financial impact of the
Restructure; ability to recognize the anticipated benefits of the
merger; costs related to the proposed Restructure; the satisfaction
of the closing conditions to the Restructure; the timing of the
completion of the Restructure; demand for consumer electrics;
impact of the COVID-19 pandemic; global economic conditions;
geopolitical events and regulatory changes; loss of key personnel;
difficulty managing planned growth properly; access to additional
financing; changes in tax laws; changing interpretations of
generally accepted accounting principles; inquiries and
investigations and related litigation; continued compliance with
government regulations; and other risks and uncertainties indicated
from time to time in filings with the SEC. The foregoing list of
factors is not exclusive. Additional information concerning these
and other risk factors is contained in LLIT's most recent filings
with the SEC and will be contained in the Form F-4 and other
filings to be filed as result of the transactions described above.
All subsequent written and oral forward-looking statements
concerning LLIT, Merger Sub or Newegg or the transactions described
herein or other matters and attributable to LLIT, Merger Sub or
Newegg, or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above.
Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made.
Neither LLIT, Merger Sub nor Newegg undertake or accept any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statement to reflect any change in
their expectations or any change in events, conditions or
circumstances on which any such statement is based.
Participants in Solicitation
Newegg, LLIT and their respective directors, executive officers
and other members of their management and employees may be deemed
to be participants in the solicitation of proxies of the Company's
shareholders in connection with the potential transactions
described herein under the rules of the SEC. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of Newegg's and LLIT's officers and
directors in the registration statement on Form F-4 to be filed
with the SEC and will also be contained in the proxy
statement/prospectus relating to the proposed transactions when it
is filed with the SEC. These documents may be obtained free
of charge from the sources indicated below.
Non-Solicitation
This press release is not a notice of shareholders meeting or
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the proposed transactions and shall
not constitute an offer to sell or a solicitation of an offer to
buy the securities of the Company or Newegg Inc., nor shall there
be any sale of any such securities in any state or jurisdiction in
which such offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of such
state or jurisdiction. No offer of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended.
Additional Information about the Transactions and Where to
Find It
In connection with the proposed Restructure, the Company will
file a registration statement on Form F-4 with the SEC and will
mail notices of shareholders meeting and other relevant documents
to its shareholders. Investors and security holders of the Company
are advised to read, when available, the From F-4, and amendments
thereto, the notice to shareholders, and amendments thereto, in
connection with the Company's solicitation of proxies for its
shareholder' meeting to be held to approve the transactions
described herein because the notice to shareholders will contain
important information about the transactions and the parties to the
transactions. The notices to shareholders will be mailed to the
Company's shareholders as of a record date to be established for
voting on the transactions. Shareholders will also be able to
obtain copies of the notice, without charge, once available, at the
SEC's website at www.sec.gov or by directing a request to: Room
611, 6th Floor, BeiKong Technology Building, No. 10 Baifuquan Road,
Changping District, Beijing
102200, People's Republic of
China.
A registration statement relating to these securities will be
filed with the SEC but has not yet become effective. These
securities may not be sold, nor may offers to buy be accepted,
prior to the time the registration statement becomes
effective. This news release shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any
sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction. A copy of LLIT's registration statement on Form
F-4, once available, can be viewed on the SEC's website.
View original
content:http://www.prnewswire.com/news-releases/lianluo-smart-limited-and-newegg-inc-announce-entering-into-merger-agreement-301159161.html
SOURCE Lianluo Smart Limited