SCHEDULE: Hillhouse Bids Higher for Smart Share Global Take-Private

Hillhouse Investment Management submits a competing proposal to acquire Smart Share Global Limited for $1.77 per ADS, challenging a lower management-led take-private offer.

Summary

• Hillhouse Investment Management, the second-largest shareholder with 14.4% ownership, has submitted a competing proposal to acquire all outstanding shares of Smart Share Global Limited not already beneficially owned by Hillhouse (excluding management rollover shares) for US$1.77 per American depositary share (ADS) or US$0.885 per Class A share in cash.
• This Competing Proposal represents a premium of approximately 42% over the Current Price of US$1.25 per ADS (US$0.625 per share) offered by the Current Consortium, which includes company management.
• The Current Consortium's merger agreement, dated August 1, 2025, implies an equity value of approximately US$327 million on a fully-diluted basis, which is below Smart Share Global Limited's total cash value of US$415.3 million as of December 31, 2024.
• Hillhouse estimates the company's total equity value to be approximately US$450 million, derived from its US$415.3 million cash value plus an estimated US$35 million enterprise value based on discounted cash flow calculations.
• Hillhouse projects Smart Share Global Limited will resume growth in 2026 and achieve positive Non-GAAP operating income in 2027.
• Hillhouse intends to fund the Proposed Acquisition solely through immediately available and fully committed equity capital from its U.S.-dollar investment funds, requiring no third-party equity or debt financing.
• Hillhouse previously expressed fundamental disapproval of the Current Consortium's January 5, 2025 proposal, citing substantial undervaluation and concerns regarding the independence of the Special Committee of the Board.
• The Special Committee did not engage with Hillhouse after receiving their concerns and subsequently unanimously recommended the Current Consortium's offer without addressing Hillhouse's points or proposed safeguards.

Sentiment

Score: 8

Explanation: The filing presents a significantly higher competing offer for the company, which is a strong positive for minority shareholders. It also highlights the company's substantial cash reserves relative to the initial lower bid, suggesting significant undervaluation. The fully committed, no-debt financing for the new offer adds to its attractiveness and certainty.

Positives

• The Competing Proposal offers a significant premium of approximately 42% over the Current Consortium's offer price and a 147% premium over the closing price of ADSs on January 3, 2025, providing compelling value for shareholders.
• The Proposed Acquisition is fully funded by Hillhouse's internal equity capital, eliminating third-party financing risk and potentially leading to a quicker and more certain closing compared to the Current Consortium's deal.
• Hillhouse's estimated total equity value of US$450 million is substantially higher than the Current Consortium's implied equity value of US$327 million and the company's total cash value of US$415.3 million.
• Hillhouse's projections indicate a return to growth for the company in 2026 and positive Non-GAAP operating income by 2027, suggesting a more optimistic future outlook than implied by the lower bid.

Negatives

• The Special Committee of the Board unanimously recommended the lower Current Consortium offer without engaging with Hillhouse or addressing their previously stated concerns about undervaluation and governance.
• The Current Consortium, despite holding only approximately 17% of the company's share capital, can satisfy the voting requirements under Cayman law due to the Management Members' super-voting Class B ordinary shares, potentially allowing a lower offer to pass against minority shareholder interests.
• The Current Consortium's implied equity value of approximately US$327 million is notably below the company's total cash value of US$415.3 million as of December 31, 2024, suggesting a significant undervaluation.

Risks

• The Management Members' super-voting Class B ordinary shares could enable the Current Consortium's lower offer to be approved under Cayman law, regardless of minority shareholder opposition.
• The Special Committee's perceived lack of independence and failure to engage with Hillhouse or address their concerns raises corporate governance risks regarding the fairness of the merger evaluation process.
• There is a risk that the Board and Special Committee may not determine Hillhouse's Competing Proposal to be a 'Superior Proposal' under the existing Merger Agreement.
• The existing Merger Agreement with the Current Consortium may not be terminated, preventing the higher offer from proceeding.

Future Outlook

Hillhouse projects Smart Share Global Limited to resume growth in 2026 and achieve positive Non-GAAP operating income in 2027, based on steady operational growth.

Management Comments

• The Special Committee did not engage with us at all after receiving the February Letter, and subsequently unanimously recommended that the Company enter into the Merger Agreement at the Current Price without addressing any of our concerns or including any safeguards proposed in the February Letter.
• We will ask the Management Members not to be cashed out in the Proposed Acquisition and instead roll over all shares and ADSs they beneficially own into the acquisition entity.

Industry Context

The filing details a contested take-private bid for Smart Share Global Limited, a company in the mobile charging sector. This situation highlights the potential for significant valuation discrepancies and corporate governance challenges in take-private transactions, especially when incumbent management is part of the bidding consortium.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess the proposed acquisition against global industry benchmarks. The comparison is primarily internal, contrasting the proposed offer prices with the company's cash value and Hillhouse's internal valuation.

Corporate Governance

Related Party Transactions

• The Current Consortium includes Mr. Mars Guangyuan Cai (Chairman & CEO), Mr. Peifeng Xu (Director & President), Mr. Victor Yaoyu Zhang (CMO), and Ms. Maria Yi Xin (Director & CFO), who are management members involved in the take-private bid.
• Hillhouse's proposal includes a rollover of shares and ADSs held by these management members into the acquisition entity, similar to the Current Consortium's plan.

Stakeholder Impact

• Shareholders: Potential for significantly higher returns if Hillhouse's proposal is accepted (US$1.77 vs US$1.25 per ADS). Risk of undervaluation if the lower offer proceeds due to super-voting shares.
• Management: Management members are part of the Current Consortium's take-private bid and are proposed to roll over their shares in Hillhouse's competing offer, indicating their continued involvement in the company post-acquisition.
• Company (Smart Share Global Limited): The outcome will determine whether the company goes private at a higher or lower valuation, impacting its future strategic direction and capital structure.

Next Steps

• Hillhouse urges the Special Committee and the Board to determine the Competing Proposal constitutes a 'Superior Proposal' under the Merger Agreement.
• Hillhouse requests the Board to authorize and cause the Company to terminate the Merger Agreement with the Current Consortium.
• Hillhouse requests the Board to enter into Definitive Agreements with Hillhouse to pursue the Proposed Acquisition.
• Hillhouse is prepared to promptly negotiate and execute mutually satisfactory definitive agreements.
• Hillhouse is committed to working with the Special Committee and its advisors to bring the Proposed Acquisition to a successful and timely conclusion.
• Hillhouse remains open to working with the Management Members if the Merger Agreement is terminated.

Key Dates

Recommendation

The filing reveals a significantly undervalued company with substantial cash reserves, targeted for a take-private at a price below its cash value. Hillhouse's competing offer represents a 42% premium over the initial bid and is fully funded, offering a compelling upside for shareholders. The strong financial backing and clear rationale for a higher valuation make the stock an attractive 'strong buy' for investors seeking arbitrage or a higher exit price.

Keywords

Smart Share Global, take-private, merger, Hillhouse, private equity, shareholder activism, valuation, mobile charging, SEC filing, Schedule 13D