• YTO Strategic Acquisition of On Time Group, Globalization Supporting " the Belt and Road Initiatives "

    2017-11-03

    Based on the announcement of YTO Express Group Co., Ltd.(600233.SH), its subsidiary YTO Global Holdings Limited has completed the stock exchange procedures with selling parties of On Time Logistics Holdings Limited (06123.HK) (hereinafter referred to as “On Time Group”). After the exchange procedure, YTO holds 61.75% of On Time Logistics Holdings Limited and realizes the controlling of stock-holding of On Time Group.This is the first large-scale cross-border M & A in the history of China's express logistics industry. YTO addressed its willing to establish more platforms to support the construction of “the Belt and Road” and to make more contributions to “Service in China” and “Made in China”.

    According to the "Hong Kong Code on Acquisition and Mergers", after completing the acquisition, YTO Express shall acquire all On Time issued shares equity (not including shares refusing to accept the offer and the shares YTO has held already by the acquisition) and stock options that have not been exercised in cash unconditionally.

    According to the announcement, after the acquisition YTO will realize the control of stock-holding of On Time Group and incorporate On Time Group into YTO accounting statements, which will cause favorable impact on YTO financial indicators and sustainable profitability.

    YTO Express is a leading enterprise in China domestic industry and one of the two private express companies with airline subsidiaries. After first listed in 2016 on A shares market,YTO now takes another first maneuver in globalized express field. After the acquisition of On Time, YTO will have two listed companies and become the first logistics company with global networks and hubs in China.

    On Time Group is a sophisticated and growing international logistics company, taking air and sea freight forwarding as its core business and providing customers with warehousing, delivery, customs clearance, contracts and other logistics service. Now On Time has entities in 17 countries and regions, 52 transshipment centers globally, more than 2000 lines, covering business more than 150 countries. On Time has cultivated wide-range customers group, covering various forwarders and direct clients.

    May 8th 2017, YTO Express Group Co., Ltd. Signed Stock Trading Agreement with Spencer Lam, Golden Strike International Limited and Polaris International Holdings Limited, in which parties agreed YTO or its wholly owned subsidiary to acquire 61.87% in total, 255,820,000 shares of On Time Group, a Hong Kong listed company (6123.HK), and the target share price is 1,041,116,160 HKD (4.0698 HKD per share).

    Later, YTO received “No Further Notice of Review”from Anti-monopoly Bureau of the Ministry of Commerce of the People's Republic of China,“Notice of Project Record” by Shanghai Development and Reform Commission and “Overseas Certificate of Enterprise Investment” and “Business Registration Voucher” by China (Shanghai) Free Trade Test Zone Administration Committee.

    The chairman of the board of directors and president of YTO Express Yu Weijiao addressed, YTO and On Time Group Logistics can form complementation and synergy, which will not only benefit YTO to expand global network and strengthen competitive ability, but also launch cross-border logistics products and service, thus lay foundation for YTO to become an leading operator and consolidator in global express industry.The chairman of the board of directors of On Time Group Spencer Lam addressed, taking Hong Kong as the core hub, On Time shall incorporate with YTO’s globalization strategy, follow " the Belt and Road Initiatives ", further integrate the strengths of both parties, develop whole-chain products and speed up international business.

    The strategic acquisition fully agrees with YTO’s globalization strategy. Hong Kong is an important international financial, shipping and trade center and an important node in the construction of " the Belt and Road ". After the acquisition of On Time Group, YTO will take Hong Kong as the global import and export hub and platform. Besides, Hong Kong will be the headquarters of YTO Global and GPA (Global Parcel Alliance).

    Specifically, the first is the further development of international freight forwarding business and multi-modal transport development of sea, air and road, including participating in interstate freight market, especially synergizing the road transport network covering southeast Asia, etc.

    The second is integrating the advantage resources, development of the whole link express logistics products, relying on YTO express network, local network and express network, and perform well in international business listed in domestic service with the best cost-effective performance. As an important shareholder of YTO, Alibaba, Cainiao and YTO’s strategic synergy is obvious. Alibaba invested Lazada in Southeast Asia and PayTM in India, YTO can follow its steps to further develop its market share and acquire first mover advantage.

    What comes thirdly is the expansion of international network. YTO’s current model is direct operation and terminal franchisee, balancing the expansion of business and the control of quality, together with the balance of cost and effectiveness. From the international experience, the overseas expansion of several international giants has also taken the development path of building hubs and cooperating with agents. After the acquisitions of On Time Group, YTO can develop its global business along with the key area, particularly the southeast Asia, " the Belt and Road Initiatives " and overseas Chinese regions, realizing the construction of overseas storage, transshipment, distribution function, service exports and imports.

    Yu Weijiao addressed, “The eCommerce platform in China operate with ‘Buy Globally’ and ‘Sell Globally’, and we will be responsible for ‘Transport Globally’ and ‘Deliver Globally’.”China express is in a leading place globally, and YTO Express will bring new experience of “China Service” and “China Speed” to global customers.

    As “ the first listed express company in China”, YTO develops its globalization step by step.

    May this year, YTO officially announced the initiation of Global Parcel Alliance with the attendance of 50 express companies from more than 20 countries, who are also the first members. GPA is the only global express platform initiated by domestic express company with the name of " the Belt and Road in Logistics” by logistics experts.

    September this year, YTO launched the strategic layout to operate Yixi-Europe trains, the China-Europe lines with the best loading efficiency and newest operation mode, together with Huarong Asset and Tianmeng Group.

    In October, YTO led the establishment of the Global Logistics Chamber of Commerce of Shanghai Association of Industry and Commerce, the first international chamber of commerce in the field of international logistics, and Yu Weijiao was the first President. The chamber of commerce takes "innovation and liaison" as its vision, committed to promote the development of " the Belt and Road ", promoting international customs clearance, warehousing, multimodal transport, as well as the organic link of information network, thus to build credibility system of logistics platform and promote international logistics facilitation.

    It can be seen that the internationalization of YTO has obvious characteristics: First, it is closely combined with the big strategy of " the Belt and Road ", and good at borrowing power; Second, it pays more attention to building a public platform for the industry, not to "walk alone fast", but to seek "crowd far"; Thirdly, it is outstanding at capital operating to enter new markets.

    The country has entered a new era, and the enterprise has to take new maneuvers. Yu Weijiao believes that China's express logistics has entered a new stage requiring five aspects of comprehension: the Internet and IOT integration, the domestic and international integration, the upstream and downstream industry chain integration, express and logistics integration and capital, technology and talent integration.The big logistics era of China has just begun. Opportunities and challenges coexist in the future of China express logistics industry development, and opportunities are greater than challenges. Many Chinese express enterprises, YTO included, have a long way to go.