tm2331317-1_sc13e3 - none - 3.2500262s
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3
RULE 13e-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Genetron Holdings Limited
(Name of the Issuer)
Genetron Holdings Limited
New Genetron Holding Limited
Genetron New Co Limited
Mr. Sizhen Wang
FHP Holdings Limited
SUPER SAIL, LLC
Genetron Discovery Holdings Limited
Tianjin Kangyue Business Management Partnership (Limited Partnership)
CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership)
CICC Healthcare Investment Fund, L.P.
Surrich International Company Limited
Wuxi Huihongyingkang Investment Partnership (Limited Partnership)
Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership)
CCB (Beijing) Investment Fund Management Co., Ltd.
CCB Trust Co., Ltd.
Wealth Strategy Holding Limited
Easy Benefit Investment Limited
Easy Best Investment Limited
Wealth Strategy Group Limited
Mr. Hung Ka Kung
Dr. Hai Yan
Eugene Health Limited
Dr. Yuchen Jiao
Genetron Alliance Holdings Limited
Mr. Evan Ce Xu
Dr. Yun-Fu Hu
Ms. Fengling Zhang
(Names of Persons Filing Statement)
Ordinary Shares, par value $0.00002 per share*
American Depositary Shares, each representing fifteen (15) Ordinary Share
(Title of Class of Securities)
37186H100**
(CUSIP Number)
Genetron Holdings Limited
1-2/F, Building 11, Zone 1
No. 8 Life Science Parkway
Changping District, Beijing, 102206
People’s Republic of China
+86 10 5090-7500

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Mr. Sizhen Wang
FHP Holdings Limited
SUPER SAIL, LLC
Genetron Discovery Holdings Limited
1-2/F, Building 11, Zone 1
No. 8 Life Science Parkway Changping District, Beijing, 102206
People’s Republic of China
(86) 10 5090-7500
Dr. Hai Yan
Eugene Health Limited
Dr. Yuchen Jiao
Genetron Alliance Holdings Limited
Mr. Evan Ce Xu
Dr. Yun-Fu Hu
Ms. Fengling Zhang
1-2/F, Building 11, Zone 1,
No. 8 Life Science Parkway, Changping District, Beijing, 102206
People’s Republic of China
(86) 10 5090-7500
Tianjin Kangyue Business Management Partnership (Limited Partnership)
CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership)
CICC Healthcare Investment Fund, L.P.
c/o 25th Floor and 26th Floor, China World Tower B, No. 1 Jian Guo Men Wai Avenue
Beijing 100004, People’s Republic of China
86 (10) 6505 1166
Surrich International Company Limited
Suite 1901-2, 19/F, Shui On Centre
6-8 Harbour Road, Wanchai
Hong Kong SAR
(852) 28611161
Wuxi Huihongyingkang Investment Partnership (Limited Partnership)
Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership)
18/F, Xinxi Port, No .5 Zhihui Road, Huishan District, Wuxi
Jiangsu Province 214174
People’s Republic of China
(86) 15251531315
CCB (Beijing) Investment Fund Management Co., Ltd.
CCB Trust Co., Ltd.
10/F, Building 4, ChangAn XingRong Centre
No. 1, Naoshikou Street
Xicheng District, Beijing 100031
People’s Republic of China
(86) 10 8314 2483
Wealth Strategy Holding Limited
Easy Benefit Investment Limited
Easy Best Investment Limited
Wealth Strategy Group Limited
Mr. Hung Ka Kung
86/F, International Commerce Centre, 1 Austin Road West, Kowloon,
Hong Kong
(+852) 3651-7155
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
With copies to:
Li He, Esq.
Xuelin (Steve) Wang, Esq.
Davis Polk & Wardwell LLP
18/F, The Hong Kong
Club Building 3A Chater Road,
Central Hong Kong,
People’s Republic of China
+852 2533 3300
Peter X. Huang, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
30/F, China World Office 2
No. 1, Jianguomenwai Avenue
Chaoyang District
Beijing 100004
People’s Republic of China
+86 10 6535 5500
Benjamin Su, Esq.
Daying Zhang, Esq.
Latham & Watkins LLP
18th Floor, One Exchange Square
8 Connaught Place, Central
Hong Kong
+852 2912-2500
This statement is filed in connection with (check the appropriate box):
a   ☐   The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14-C or Rule 13e-3(c) under the Securities Exchange Act of 1934.
b   ☐   The filing of a registration statement under the Securities Act of 1933.
c   ☐   A tender offer
d   ☒   None of the above

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Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐
Check the following box if the filing is a final amendment reporting the results of the transaction: ☐
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction, passed upon the merits or fairness of this transaction, or passed upon the adequacy or accuracy of the disclosure in this transaction statement on schedule 13e-3. Any representation to the contrary is a criminal offense.
*
Not for trading, but only in connection with the listing on the Nasdaq Global Market of the American depositary shares
**
This CUSIP applies to the American depositary shares, each representing fifteen Ordinary Shares

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INTRODUCTION
This Rule 13e-3 transaction statement on Schedule 13E-3, together with the exhibits hereto (this “Transaction Statement”), is being filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), jointly by the following persons (each, a “Filing Person,” and collectively, the “Filing Persons”): (a) Genetron Holdings Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), the issuer of the ordinary shares, par value US$0.00002 per share (each, a “Share,” and collectively, the “Shares”), including Shares represented by American depositary shares (each, an “ADS,” and collectively, the “ADSs”), each representing fifteen (15) Shares that is subject to the transaction pursuant to Rule 13e-3 under the Exchange Act; (b) New Genetron Holding Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Parent”); (c) Genetron New Co Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly owned subsidiary of Parent (“Merger Sub”); (d) Mr. Sizhen Wang, the chief executive officer and chairman of the board of directors of the Company (“Mr. Wang”); (e) FHP Holdings Limited, a company incorporated under the laws of the British Virgin Islands (“FHP Holdings”); (f) SUPER SAIL, LLC, a limited liability company incorporated under the laws of Delaware, United States of America (“Super Sail”); (g) Genetron Discovery Holdings Limited, a company incorporated under the laws of the British Virgin Islands (“Genetron Discovery”); (h) Tianjin Kangyue Business Management Partnership (Limited Partnership), a partnership established in the People’s Republic of China (“Tianjin Kangyue”); (i) CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership), a partnership established in the People’s Republic of China (“CICC Kangrui”); (j) CICC Healthcare Investment Fund, L.P., an entity incorporated in the Cayman Islands (“CICC Healthcare Investment,” together with Tianjin Kangyue, CICC Kangrui, collectively, “CICC”); (k) Surrich International Company Limited, a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China (“Wuxi Capital”); (l) Wuxi Huihongyingkang Investment Partnership (Limited Partnership), a limited partnership organized under the laws of the People’s Republic of China (“Wuxi Huihongyingkang”); (m) Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership), a limited partnership organized under the laws of the People’s Republic of China (“Wuxi Huizhisheng,” together with Wuxi Huihongyingkang, “Wuxi Huishan Capital”); (n) CCB (Beijing) Investment Fund Management Co., Ltd., a limited liability company incorporated under the laws of the People’s Republic of China (“CCB Investment”); (o) CCB Trust Co., Ltd., a limited liability company incorporated under the laws of the People’s Republic of China (“CCB Trust”, together with CCB Investment, “CCB”); (p) Wealth Strategy Holding Limited, a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China (“Wealth Strategy Holding”); (q) Easy Best Investment Limited, a company incorporated under the laws of the British Virgin Islands (“Easy Best”); (r) Easy Benefit Investment Limited, a company incorporated under the laws of the British Virgin Islands (“Easy Benefit”, together with Easy Best, collectively, “WSG Entities”); (s) Wealth Strategy Group Limited, a company incorporated under the laws of the British Virgin Islands (“Wealth Strategy Group”, together with Wealth Strategy Holding, collectively, “Wealth Strategy”); (t) Mr. Hung Ka Kung, the controlling shareholder and a director of Wealth Strategy Group (“Mr. Kung”); (u) Dr. Hai Yan, the chief scientific officer and a director of the Company (“Dr. Yan”); (v) Dr. Yuchen Jiao, the chief technology officer of the Company (“Dr. Jiao”); (w) Eugene Health Limited, a company incorporated under the laws of the British Virgin Islands (“Eugene Health”); (x) Genetron Alliance Holdings Limited, a company incorporated under the laws of the British Virgin Islands (“Gentron Alliance”); (y) Mr. Evan Ce Xu, the chief financial officer (“Mr. Xu”); (z) Dr. Yun-Fu Hu, the chief medical officer of the Company (“Dr. Hu”); and (aa) Ms. Fengling Zhang, the vice president of the Company (“Ms. Zhang”).
Throughout this Transaction Statement, (a) Mr. Wang, Parent, Merger Sub, CICC, Wuxi Capital, Wuxi Huishan Capital, CCB, Wealth Strategy and Mr. Kung are collectively referred to as the “Buyer Group,” (b) (x) Mr. Wang, Tianjin Kangyue and CICC Healthcare Investment, (y) FHP Holdings, Dr. Yan, Genetron Voyage Holdings Limited, Genetron United Holdings Limited, Eugene Health, IN Healthcare Limited, Easy Benefit, Tianjin Yuanjufu Business Management Partnership (Limited Partnership), Easy Best, Tianjin Genetron Jun’an Business Management Partnership (Limited Partnership), Tianjin Genetron Juncheng Business Management Partnership (Limited Partnership), Genetron Alliance, Genetron Discovery, Vivo Capital Fund IX, L.P., Alexandria Venture Investments, LLC, Tianjin Tianshu Xingfu Corporation Management L.P., Eminence Legend Consultancy (HK) Limited, Ke Li, Xiao Yu Lu, Zuo Xiang, Peng Pamela Yan, Hong Chen, Jiayin Zhang, Genetron Health (Hong Kong) Company Limited, Super Sail, Wei-Wu He, Huiying Memorial Foundation, WEALTH FAITH INVESTMENT LTD., Qijing Li, Xiao Fan
 
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Wang, Jing Zhu, Kensington Trust Singapore Limited ato IS&P (First Names Singapore) Retirement Fund — FN45, Kevin Ying Hong and EVER PRECISE INVESTMENTS LIMITED (collectively, the “Other Rollover Shareholders”) are collectively referred to herein as the “Rollover Shareholders,” ​(c) Dr. Yan, Dr. Jiao, Mr. Xu, Dr. Hu and Ms. Zhang are collectively referred to herein as the “Management Filing Persons,” and (d) FHP Holdings, Super Sail, Genetron Discovery, Genetron Alliance and Eugene Health are collectively referred to herein as the “Management Holding Entities.” The Buyer Group, WSG Entities, Management Filing Persons and Management Holding Entities are collectively referred to herein as the “Participants.”
On October 11, 2023, Parent, Merger Sub and the Company entered into an agreement and plan of merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving company after the merger as a wholly owned subsidiary of Parent (the “Merger”).
Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (i) each Share issued and outstanding immediately prior to the Effective Time shall be cancelled and cease to exist, in consideration and exchange for the right to receive US$0.272 in cash per Share without interest and net of any applicable withholding taxes (the “Per Share Merger Consideration”), (ii) each ADS issued and outstanding immediately prior to the Effective Time, other than ADSs representing the Excluded Shares, if any, will represent the right to receive US$4.08 in cash per ADS, without interest and net of any applicable withholding taxes (already adjusted to reflect the change to the ADS ratio, the “Per ADS Merger Consideration”), except for (x) (a) 277,149,985 Shares (including Share represented by ADSs) held by the Rollover Shareholders as of October 11, 2023 (collectively, the “Rollover Shares”), which will be cancelled and cease to exist without payment of consideration as contemplated by and in accordance with the rollover and support agreement entered into between Parent and each of the Rollover Shareholders (the “Support Agreement”), (b) Shares (including Shares represented by ADSs) held by Parent, Merger Sub and any of their respective affiliates, (c) Shares (including Shares represented by ADSs) held by the Company or any subsidiary of the Company or held in the Company’s treasury, and (d) 9,912,500 Shares (including Shares represented by ADSs) recorded under the name of the Bank of New York Mellon as a member in the register of members of the Company and reserved for issuance and allocation pursuant to 2019 Genetron Health Share Incentive Plan and 2019 Genetron Health Share Incentive Scheme (collectively, the “Company Share Plans”), in each case for (b), (c) and (d), issued and outstanding immediately prior to the Effective Time, which will be cancelled and cease to exist at the Effective Time without payment of any consideration or distribution therefor; and (y) Shares (the “Dissenting Shares”) that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who have validly exercised and have not effectively withdrawn or lost their rights to dissent from the Merger, or dissenter rights, pursuant to Section 238 of the Companies Act (As Revised) of the Cayman Islands (the “Cayman Islands Companies Act”), which will be cancelled and cease to exist in exchange for the right to receive the payment of fair value of such Shares in accordance with Section 238 of the Cayman Islands Companies Act. The ADS holders will pay any applicable taxes, stamp duty and other government charges due to or incurred by The Bank of New York Mellon, (the “ADS Depositary”), in connection with the distribution of the Per ADS Merger Consideration and the cancellation of the ADSs surrendered, including the Depositary’s ADS cancellation fee of US$0.05 per ADS pursuant to the terms of the deposit agreement dated as of June 18, 2020 by and among the Company, the ADS Depositary, and the holders and beneficial owners of ADSs issued thereunder.
In addition to the foregoing, (i) each holder of an option (each, a “Company Option”) to purchase Shares granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested), will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Option; (ii) each holder of a Company restricted share unit (each, a “Company RSU”) granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested), will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company RSU; and (iii) each holder of a Company restricted share (each, a “Company Restricted Share”) granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested), will be assumed by Parent and converted into
 
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an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Restricted Share.
Notwithstanding the foregoing, each independent director of the Company that holds Company Options and/or Company Restricted Shares, whether vested or unvested, that are cancelled at the Effective Time will, in exchange therefor, be paid by the surviving company or one of its subsidiaries, as soon as practicable after the Effective Time pursuant to the Company’s ordinary payroll practices (but in any event no later than thirty days after the Effective Time), a cash amount (without interest and net of any applicable withholding taxes) determined as follows: (a) in the case of Company Options, an amount of cash equal to (i) the excess, if any, of (x) the Per Share Merger Consideration over (y) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Options, and (b) in the case of Company Restricted Shares, an amount of cash equal to (i) the excess, if any, of (a) the Per Share Merger Consideration over (b) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Restricted Shares.
The Merger remains subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including obtaining the requisite approval of the shareholders of the Company. The Merger Agreement, the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands in connection with the Merger (the “Plan of Merger”) and the transactions contemplated by the Merger Agreement and the Plan of Merger, including the Merger (collectively, the “Transactions”), must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Act) of the Company passed by an affirmative vote of holders of Shares representing at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy as a single class at the extraordinary general meeting or any adjournment or postponement thereof. Pursuant to the Support Agreement, the Rollover Shareholders have agreed to vote all of the Rollover Shares and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholders after the date thereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, which, as of the date hereof, collectively represent approximately 59.7% of the voting power of the total issued and outstanding Shares (excluding for the purpose of this calculation, the Shares they may acquire through the exercise of Company share incentive awards within 60 days of the date hereof). Accordingly, based on       Shares expected to be issued and outstanding on       , the record date for voting Shares at the extraordinary general meeting (the “Share Record Date”)       Shares owned by the shareholders (including ADS holders) of the Company other than the Rollover Shares as of the Share Record Date must be voted in favor of the execution of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions in order to satisfy the requirement of the affirmative vote of at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy as a single class at the extraordinary general meeting of the Company’s shareholders in accordance with Section 233(6) of the Cayman Islands Companies Act and the memorandum and articles of association of the Company, assuming all shareholders of the Company will be present and voting in person or by proxy at the extraordinary general meeting and the Rollover Shareholders will vote all Rollover Shares and newly acquired Shares in favor of such special resolutions. To the knowledge of the Company, the Rollover Shareholders and certain other shareholders of the Company affiliated to the Rollover Shareholders own more than       Shares that are not Rollover Shares, and they may vote those Shares in favor of the execution of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions.
The Company will make available to its shareholders a proxy statement (the “Proxy Statement,” a preliminary copy of which is attached as Exhibit (a)-(1) to this Transaction Statement), relating to the extraordinary general meeting of the Company’s shareholders, at which the Company’s shareholders will consider and vote upon, among other proposals, a proposal to authorize and approve the Merger Agreement, the Plan of Merger and the Transactions. As of the date hereof, the Proxy Statement is in preliminary form and is subject to completion. Capitalized terms used but not defined in this Transaction Statement shall have the meanings given to them in the Proxy Statement.
The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3. Pursuant to General Instruction F to Schedule 13E-3, the information contained in the Proxy Statement, including all annexes thereto, is incorporated in its entirety herein by this reference, and the
 
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responses to each item in this Transaction Statement are qualified in their entirety by the information contained in the Proxy Statement and the annexes thereto.
All information contained in this Transaction Statement concerning each Filing Person has been supplied by such Filing Person. No Filing Person, including the Company, has supplied any information with respect to any other Filing Person.
Item 1   Summary Term Sheet
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET”

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”
Item 2   Subject Company Information
(a)
Name and Address.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“SUMMARY TERM SHEET — The Parties Involved in the Merger”
(b)
Securities.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“THE EXTRAORDINARY GENERAL MEETING — Record Date; Shares and ADSs Entitled to Vote”

“THE EXTRAORDINARY GENERAL MEETING — Procedures for Voting”

“SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY”
(c)
Trading Market and Price.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“MARKET PRICE OF THE COMPANY’S ADSS, DIVIDENDS AND OTHER MATTERS”
(d)
Dividends.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“MARKET PRICE OF THE COMPANY’S ADSS, DIVIDENDS AND OTHER MATTERS”
(e)
Prior Public Offerings.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“TRANSACTIONS IN THE SHARES AND ADSS — Prior Public Offerings”
(f)
Prior Stock Purchases.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“TRANSACTIONS IN THE SHARES AND ADSS”
Item 3   Identity and Background of Filing Persons
(a)
Name and Address.   Genetron Holdings Limited is the subject company. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — The Parties Involved in the Merger”

“ANNEX E — DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON”
 
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(b)
Business and Background of Entities.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — The Parties Involved in the Merger”

“ANNEX E — DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON”
(c)
Business and Background of Natural Persons.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — The Parties Involved in the Merger”

“ANNEX E — DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON”
Item 4   Terms of the Transaction
(a)-(1)
Material Terms — Tender Offers.   Not applicable.
(a)-(2)
Material Terms — Merger or Similar Transactions.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET”

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Support Agreement”

“SPECIAL FACTORS — Limited Guarantee”

“SPECIAL FACTORS — Interim Investor Agreement”

“SPECIAL FACTORS — Financing of the Merger — Equity Financing”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“SPECIAL FACTORS — U.S. Federal Income Tax Consequences”

“SPECIAL FACTORS — Cayman Islands Tax Consequences”

“THE EXTRAORDINARY GENERAL MEETING”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
(c)
Different Terms.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“THE EXTRAORDINARY GENERAL MEETING — Proposals to be Considered at the Extraordinary General Meeting”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
 
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(d)
Appraisal Rights.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“DISSENTERS’ RIGHTS”

“ANNEX D — CAYMAN ISLANDS COMPANIES ACT CAP. 22 (LAW 3 OF 1961, AS CONSOLIDATED AND REVISED) — SECTION 238”
(e)
Provisions for Unaffiliated Security Holders.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS”
(f)
Eligibility of Listing or Trading.   Not applicable.
Item 5   Past Contracts, Transactions, Negotiations and Agreements
(a)
Transactions.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“SPECIAL FACTORS — Related Party Transactions”

“TRANSACTIONS IN THE SHARES AND ADSS”
(b)
Significant Corporate Events.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
(c)
Negotiations or Contacts.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
(e)
Agreements Involving the Subject Company’s Securities.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Financing of the Merger”

“SUMMARY TERM SHEET — Plans for the Company after the Merger”

“SUMMARY TERM SHEET — Support Agreement”
 
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“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Financing of the Merger”

“SPECIAL FACTORS — Plans for the Company after the Merger”

“SPECIAL FACTORS — Support Agreement”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“SPECIAL FACTORS — Voting by the Rollover Shareholders at the Extraordinary General Meeting”

“THE MERGER AGREEMENT”

“TRANSACTIONS IN THE SHARES AND ADSS”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
Item 6   Purposes of the Transaction and Plans or Proposals
(b)
Use of Securities Acquired.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET”

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Effects of the Merger on the Company”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
(c)(1)-(8)
Plans.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — The Merger”

“SUMMARY TERM SHEET — Purposes and Effects of the Merger”

“SUMMARY TERM SHEET — Plans for the Company after the Merger”

“SUMMARY TERM SHEET — Financing of the Merger”

“SUMMARY TERM SHEET — Interests of the Company’s Executive Officers and Directors in the Merger”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Effects of the Merger on the Company”

“SPECIAL FACTORS — Plans for the Company after the Merger”

“SPECIAL FACTORS — Financing of the Merger”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“THE MERGER AGREEMENT”
 
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“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
Item 7   Purposes, Alternatives, Reasons and Effects
(a)
Purposes.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Purposes and Effects of the Merger”

“SUMMARY TERM SHEET — Plans for the Company after the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”
(b)
Alternatives.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Position of the Participants as to the Fairness of the Merger”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Alternatives to the Merger”

“SPECIAL FACTORS — Effects on the Company if the Merger Is Not Completed”
(c)
Reasons.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Purposes and Effects of the Merger”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Position of the Participants as to the Fairness of the Merger”

“SPECIAL FACTORS — Purposes of and Reasons for the Merger”

“SPECIAL FACTORS — Alternatives to the Merger”

“SPECIAL FACTORS — Effects of the Merger on the Company”
(d)
Effects.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Purposes and Effects of the Merger”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Effects of the Merger on the Company”

“SPECIAL FACTORS — Plans for the Company after the Merger”

“SPECIAL FACTORS — Effects on the Company if the Merger Is Not Completed”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”
 
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“SPECIAL FACTORS — U.S. Federal Income Tax Consequences”

“SPECIAL FACTORS — Cayman Islands Tax Consequences”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
Item 8   Fairness of the Transaction
(a)-(b)
Fairness; Factors Considered in Determining Fairness.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Position of the Participants as to the Fairness of the Merger”

“SUMMARY TERM SHEET — Opinion of the Special Committee’s Financial Advisor”

“SUMMARY TERM SHEET — Interests of the Company’s Executive Officers and Directors in the Merger”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Position of the Participants as to the Fairness of the Merger”

“SPECIAL FACTORS — Opinion of the Special Committee’s Financial Advisor”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“ANNEX C — OPINION OF KROLL, LLC”
(c)
Approval of Security Holders.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“THE EXTRAORDINARY GENERAL MEETING — Vote Required”
(d)
Unaffiliated Representative.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Opinion of the Special Committee’s Financial Advisor”

“ANNEX C — OPINION OF KROLL, LLC”
(e)
Approval of Directors.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”
(f)
Other Offers.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”
 
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Item 9   Reports, Opinions, Appraisals and Negotiations
(a)
Report, Opinion or Appraisal.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Opinion of the Special Committee’s Financial Advisor”

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Opinion of the Special Committee’s Financial Advisor”

“ANNEX C — OPINION OF KROLL, LLC”
(b)
Preparer and Summary of the Report, Opinion or Appraisal.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SPECIAL FACTORS — Background of the Merger”

“SPECIAL FACTORS — Opinion of the Special Committee’s Financial Advisor”

“ANNEX C — OPINION OF KROLL, LLC”
(c)
Availability of Documents.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“WHERE YOU CAN FIND MORE INFORMATION”
The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested holder of the Shares or his, her or its representative who has been so designated in writing.
Item 10   Source and Amount of Funds or Other Consideration
(a)
Source of Funds.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Financing of the Merger”

“SPECIAL FACTORS — Financing of the Merger”

“THE MERGER AGREEMENT”

“ANNEX A — AGREEMENT AND PLAN OF MERGER”

“ANNEX B — PLAN OF MERGER”
(b)
Conditions.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Financing of the Merger”

“SPECIAL FACTORS — Financing of the Merger”
(c)
Expenses.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“SPECIAL FACTORS — Fees and Expenses”
(d)
Borrowed Funds.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“SUMMARY TERM SHEET — Financing of the Merger”

“SPECIAL FACTORS — Financing of the Merger”

“THE MERGER AGREEMENT — Financing”
 
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Item 11   Interest in Securities of the Subject Company
(a)
Securities Ownership.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Interests of the Company’s Executive Officers and Directors in the Merger”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY”
(b)
Securities Transactions.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“TRANSACTIONS IN THE SHARES AND ADSS”
Item 12   The Solicitation or Recommendation
(d)
Intent to Tender or Vote in a Going-Private Transaction.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Interests of the Company’s Executive Officers and Directors in the Merger”

“SUMMARY TERM SHEET — Support Agreement”

“SPECIAL FACTORS — Support Agreement”

“QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER”

“SPECIAL FACTORS — Voting by the Rollover Shareholders at the Extraordinary General Meeting”

“THE EXTRAORDINARY GENERAL MEETING — Vote Required”

“SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY”
(e)
Recommendations of Others.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — Position of the Participants as to the Fairness of the Merger”

“SUMMARY TERM SHEET — Support Agreement”

“SPECIAL FACTORS — Reasons for the Merger and Recommendation of the Special Committee and the Board”

“SPECIAL FACTORS — Position of the Buyer Group as to the Fairness of the Merger”

“SPECIAL FACTORS — Support Agreement”

“THE EXTRAORDINARY GENERAL MEETING — The Board’s Recommendation”
Item 13   Financial Statements
(a)
Financial Information.   The audited financial statements of the Company for the two years ended December 31, 2021 and 2022 are incorporated herein by reference to the Company’s Form 20-F for the year ended December 31, 2022, originally filed on May 12, 2023 (see page F-1 and following pages).
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“FINANCIAL INFORMATION”

“WHERE YOU CAN FIND MORE INFORMATION”
 
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(b)
Pro Forma Information.   Not applicable.
Item 14   Persons/Assets, Retained, Employed, Compensated or Used
(a)
Solicitation or Recommendations.   The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“THE EXTRAORDINARY GENERAL MEETING — Solicitation of Proxies”
(b)
Employees and Corporate Assets.   The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“SUMMARY TERM SHEET — The Parties Involved in the Merger”

“SPECIAL FACTORS — Interests of Certain Persons in the Merger”

“ANNEX E — DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON”
Item 15   Additional Information
(c)
Other Material Information.   The information contained in the Proxy Statement, including all annexes thereto, is incorporated herein by reference.
Item 16   Exhibits
(a)-(1)
(a)-(2)
(a)-(3)
(a)-(4)
(c)-(1)
(c)-(2)
(d)-(1)
(d)-(2)
(d)-(3)
(d)-(4)
(d)-(5)
(d)-(6)
 
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(d)-(7)
(d)-(8)
(d)-(9)
(d)-(10)
(d)-(11)
(d)-(12)
(d)-(13)
(d)-(14)
(d)-(15)
(f)-(1)
(f)-(2)
(g) Not applicable.
107 Calculation of Filing Fee Tables
 
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Genetron Holdings Limited
By:
/s/ Wing Kee (Kelvin) Lau
Name:
Wing Kee (Kelvin) Lau
Title:
Chairman of the Special Committee
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Sizhen Wang
By:
/s/ Sizhen Wang
New Genetron Holding Limited
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
Genetron New Co Limited
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
FHP Holdings Limited
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
SUPER SAIL, LLC
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
Genetron Discovery Holdings Limited
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Tianjin Kangyue Business Management Partnership (Limited Partnership)
By:
CICC Kangzhi (Ningbo) Equity Investment Management Co., Ltd., its general partner
By:
/seal/ CICC Kangzhi (Ningbo) Equity Investment Management Co., Ltd.
/s/ Xia Wu
Name: Xia Wu
Title:
Director
CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership)
By:
CICC Kangzhi (Ningbo) Equity Investment Management Co., Ltd., its general partner
By:
/seal/ CICC Kangzhi (Ningbo) Equity Investment Management Co., Ltd.
/s/ Xia Wu
Name: Xia Wu
Title:
Director
CICC Healthcare Investment Fund, L.P.,
acting through its general partner, CICC Healthcare Investment Management Limited
By:
/s/ Xia Wu
Name: Xia Wu
Title:
Director of CICC Healthcare Investment Management Limited
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Surrich International Company Limited
By:
/s/ PENG Yanbao
Name: PENG Yanbao
Title:   Director
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Wuxi Huihongyingkang Investment Partnership (Limited Partnership)
/seal/ Wuxi Huihongyingkang Investment Partnership (Limited Partnership)
By:
/s/ Chunlei Zhang
Name: Chunlei Zhang
Title:   Authorized Signatory
Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership)
/seal/ Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership)
By:
/s/ Yi Zhou
Name: Yi Zhou
Title:   Authorized Signatory
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
CCB (Beijing) Investment Fund Management Co., Ltd.
/seal/ CCB (Beijing) Investment Fund Management Co., Ltd.
By:
/s/ Yeqiang Wang
Name: Yeqiang Wang
Title:   Legal Representative
CCB Trust Co., Ltd.
/seal/ CCB Trust Co., Ltd.
By:
/s/ Baokui Wang
Name: Baokui Wang
Title:   Legal Representative
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Wealth Strategy Holding Limited
By:
/s/ Kung Hung Ka
Name: Kung Hung Ka
Title:   Director
Easy Benefit Investment Limited
By:
/s/ Kung Hung Ka
Name: Kung Hung Ka
Title:   Director
Easy Best Investment Limited
By:
/s/ Kung Hung Ka
Name: Kung Hung Ka
Title:   Director
Wealth Strategy Group Limited
By:
/s/ Kung Hung Ka
Name: Kung Hung Ka
Title:   Director
Hung Ka Kung
By:
/s/ Kung Hung Ka
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Hai Yan
By:
/s/ Hai Yan
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Eugene Health Limited
By:
/s/ Yuchen Jiao
Name: Yuchen Jiao
Title:   Director
Yuchen Jiao
By:
/s/ Yuchen Jiao
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Genetron Alliance Holdings Limited
By:
/s/ Sizhen Wang
Name: Sizhen Wang
Title:   Director
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Evan Ce Xu
By:
/s/ Evan Ce Xu
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Yun-Fu Hu
By:
/s/ Yun-Fu Hu
[Signature Page to Schedule 13E-3 Transaction Statement]

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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 27, 2023
Fengling Zhang
By:
/s/ Fengling Zhang
[Signature Page to Schedule 13E-3 Transaction Statement]

tm2331317-1_sc13e3_DIV_04-exha1 - none - 23.5102408s
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Exhibit (a)-(1)
PRELIMINARY PROXY STATEMENT OF THE COMPANY
[MISSING IMAGE: lg_genetron-4c.jpg]
Shareholders of Genetron Holdings Limited:
Re: Notice of Extraordinary General Meeting of Shareholders
Dear Shareholder:
You are cordially invited to attend an extraordinary general meeting of shareholders of Genetron Holdings Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), to be held on             at             a.m. (Beijing Time). The meeting will be held at 1/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, the People’s Republic of China. The accompanying notice of the extraordinary general meeting and proxy statement provide information regarding the matters to be considered and voted on at the extraordinary general meeting, including at any adjournment or postponement thereof.
On October 11, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with New Genetron Holding Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”) and Genetron New Co Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and cease to exist, with the Company continuing as the surviving company (the “Surviving Company”) and becoming a wholly-owned subsidiary of Parent. The purpose of the extraordinary general meeting is for you and the other shareholders of the Company to consider and vote, among other things, upon a proposal to authorize and approve the Merger Agreement and the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands in connection with the Merger (the “Plan of Merger”) and the transactions contemplated by the Merger Agreement and the Plan of Merger, including the Merger (collectively, the “Transactions”). Copies of the Merger Agreement and the form of the Plan of Merger are attached as Annex A and Annex B, respectively, to the accompanying proxy statement.
Each of Parent and Merger Sub was formed solely for purposes of the Merger and the investment and financing transactions related to the Merger. At the effective time of the Merger (the “Effective Time”), Parent will be beneficially owned by (i) Mr. Sizhen Wang, the chief executive officer and chairman of the board of directors of the Company (“Mr. Wang”), (ii) Tianjin Kangyue Business Management Partnership (Limited Partnership), a partnership established in the People’s Republic of China (“Tianjin Kangyue”), (iii) CICC Healthcare Investment Fund, L.P., an entity incorporated in the Cayman Islands (“CICC Healthcare Investment”), (iv) Surrich International Company Limited, a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China (“Wuxi Capital”), (v) Wuxi Huihongyingkang Investment Partnership (Limited Partnership), a limited partnership organized under the laws of the People’s Republic of China (“Wuxi Huihongyingkang”), (vi) CCB (Beijing) Investment Fund Management Co., Ltd., a limited liability company incorporated under the laws of the People’s Republic of China (“CCB Investment”), (vii) Wealth Strategy Holding Limited, a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China (“Wealth Strategy”, together with Tianjin Kangyue, CICC Healthcare Investment, Wuxi Capital, Wuxi Huihongyingkang and CCB Investment, collectively, the “Sponsors”), and (viii) other rollover shareholders, including FHP Holdings Limited, Hai Yan, Genetron Voyage Holdings Limited, Genetron United Holdings Limited, Eugene Health Limited, IN Healthcare Limited, EASY BENEFIT INVESTMENT LIMITED, Tianjin Yuanjufu Business Management Partnership (Limited Partnership), EASY BEST INVESTMENT LIMITED, Tianjin Genetron Jun’an Business Management Partnership (Limited Partnership), Tianjin Genetron Juncheng Business Management Partnership (Limited Partnership), Genetron Alliance Holdings Limited, Genetron Discovery Holdings Limited, Vivo Capital Fund IX, L.P., Alexandria Venture Investments, LLC, Tianjin Tianshu Xingfu Corporation Management L.P., Eminence Legend Consultancy (HK) Limited, Ke Li, Xiao Yu Lu, Zuo Xiang, Peng Pamela Yan, Hong Chen, Jiayin Zhang, Genetron Health (Hong Kong) Company Limited, SUPER SAIL, LLC, Wei-Wu He, Huiying Memorial Foundation, WEALTH FAITH INVESTMENT LTD., Qijing Li, Xiao Fan Wang, Jing Zhu,
 

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Kensington Trust Singapore Limited ato IS&P (First Names Singapore) Retirement Fund — FN45, Kevin Ying Hong and EVER PRECISE INVESTMENTS LIMITED (collectively, the “Other Rollover Shareholders”, together with Mr. Wang, Tianjin Kangyue, CICC Healthcare Investment, collectively, the “Rollover Shareholders”) or their respective designated affiliates. Parent, Merger Sub, the Sponsors and Mr. Wang are collectively referred to herein as the “Buyer Group”. If the Merger is completed, the Company will continue its operations as a privately held company and will be wholly owned by Parent, the American depositary shares (each currently representing fifteen (15) Shares, “ADSs”) will no longer be listed on The Nasdaq Global Market (“NASDAQ”) and the ADS program for the Shares will terminate.
If the Merger is consummated, at the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares (as defined below), the Dissenting Shares (as defined below) and Shares represented by ADSs) will be cancelled in exchange for the right to receive US$0.272 in cash per Share, without interest and net of any applicable withholding taxes (the “Per Share Merger Consideration”), and each ADS issued and outstanding immediately prior to the Effective Time, other than ADSs representing the Excluded Shares, together with the Shares represented by such ADS, will be cancelled in exchange for the right to receive US$4.08 in cash per ADS, without interest and net of any applicable withholding taxes (already adjusted to reflect the change to the ADS ratio, the “Per ADS Merger Consideration”). The ADS holders will pay any applicable fees, charges and expenses of or incurred by The Bank of New York Mellon, in its capacity as ADS depositary (the “ADS Depositary”), and taxes, stamp duty and other government charges due to or incurred by the ADS Depositary, in connection with the distribution of the Per ADS Merger Consideration and the cancellation of the ADSs surrendered (and the underlying Shares), including applicable ADS cancellation fee of US$0.05 per ADS pursuant to the terms of the deposit agreement (the “Deposit Agreement”), dated as of June 18, 2020, by and among the Company, the ADS Depositary, and the holders and beneficial owners of ADSs issued thereunder).
Notwithstanding the foregoing, if the Merger is completed, the following Shares will not be cancelled in exchange for the right to receive the cash consideration described above, but will be cancelled and cease to exist at the Effective Time:
(a)
(i) 277,149,985 Shares (including Shares represented by ADSs) beneficially owned (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the Rollover Shareholders as of October 11, 2023 (the “Rollover Shares”), (ii) Shares (including Shares represented by ADSs) held by Parent, Merger Sub and any of their respective affiliates, (iii) Shares (including Shares represented by ADSs) held by the Company or any subsidiary of the Company or held in the Company’s treasury, and (iv) 9,912,500 Shares (including Shares represented by ADSs) recorded under the name of the Bank of New York Mellon as a member in the register of members of the Company and reserved for issuance and allocation pursuant to 2019 Genetron Health Share Incentive Plan and 2019 Genetron Health Share Incentive Scheme (collectively, the “Company Share Plans”), in each case for (ii), (iii) and (iv), issued and outstanding immediately prior to the Effective Time, will be cancelled and cease to exist at the Effective Time without payment of any consideration or distribution therefor (collectively, the “Excluded Shares”); and
(b)
Shares that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the Merger and seek appraisal and payment of the fair value of their Shares, or dissenter rights, pursuant to Section 238 of the Companies Act (As Revised) of the Cayman Islands (the “Cayman Islands Companies Act”) (collectively, the “Dissenting Shares”, and holders of the Dissenting Shares collectively, the “Dissenting Shareholders”) will be cancelled and cease to exist at the Effective Time and the Dissenting Shareholders will not be entitled to receive the Per Share Merger Consideration and will be entitled to receive only the payment of the fair value of their Dissenting Shares as determined by the Grand Court of the Cayman Islands pursuant to Section 238 of the Cayman Islands Companies Act.
In addition to the foregoing, at the Effective Time, the Company will (a) terminate the Company Share Plans and any relevant award agreements entered into under the Company Share Plans, and (b) provide for the treatment of each Company Option (as defined below) that is then outstanding and unexercised, whether or not vested or exercisable, and each Company Restricted Share and Company RSU (each as defined below) that is then outstanding, whether or not vested, as described below.
 
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At the Effective Time, (i) each holder of an option (each, a “Company Option”) to purchase Shares granted under the Company Share Plans that remains outstanding immediately prior to the Effective Time (whether vested or unvested) will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Option; (ii) each holder of a Company restricted share unit (each, a “Company RSU”) granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested) will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company RSU; and (iii) each holder of a Company restricted share (each, a “Company Restricted Share”) granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested) will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Restricted Share.
Notwithstanding the foregoing, each independent director of the Company that holds Company Options and/or Company Restricted Shares, whether vested or unvested, that are cancelled at the Effective Time will, in exchange therefor, be paid by the surviving company or one of its subsidiaries, as soon as practicable after the Effective Time pursuant to the Company’s ordinary payroll practices (but in any event no later than thirty days after the Effective Time), a cash amount (without interest and net of any applicable withholding taxes) determined as follows: (a) in the case of Company Options, an amount of cash equal to (i) the excess, if any, of (x) the Per Share Merger Consideration over (y) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Options, and (b) in the case of Company Restricted Shares, an amount of cash equal to (i) the excess, if any, of (x) the Per Share Merger Consideration over (y) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Restricted Shares.
The Buyer Group intends to fund the Merger consideration through a combination of (i) rollover equity (represented by the Rollover Shares) from the Rollover Shareholders, and (ii) cash contribution by the Sponsors. On October 11, 2023, Parent entered into an equity commitment letter with each of the Sponsors (each an “Equity Commitment Letter”, and collectively, the “Equity Commitment Letters”), pursuant to which such Sponsor has agreed, subject to the terms and conditions thereof, to provide or procure the provision of the financing amounts specified therein for the purpose of financing the Merger consideration, and each of the Sponsors delivered a limited guarantee (each a “Limited Guarantee”, and collectively, the “Limited Guarantees”) in favor of the Company or one of its PRC subsidiaries, as appropriate, to guarantee certain payment obligations of Parent under the Merger Agreement.
On October 11, 2023, a special committee of the board of directors of the Company (the “Board”), composed solely of independent and disinterested directors (the “Special Committee”), acting with full power and authority delegated by the Board, reviewed and considered the terms and conditions of the Merger Agreement, the Plan of Merger, the Limited Guarantees and the Transactions. The Special Committee, after consultation with its financial advisor and legal counsel and due consideration of all relevant factors, unanimously (a) determined that the Merger as contemplated in the Merger Agreement and the Plan of Merger is fair to and in the best interests of the Company and its shareholders and ADS holders, other than shareholders and ADS holders who are affiliates of the Company and the holders of Excluded Shares (such unaffiliated shareholders and ADS holders are referred to herein as the “Unaffiliated Security Holders”), and it is advisable for the Company to enter into the Merger Agreement, the Plan of Merger, the Limited Guarantees and the consummation of the Transactions, and (b) recommended that the Board authorize and approve the Merger Agreement, the Plan of Merger, the Limited Guarantees, and the consummation of the Transactions.
On October 11, 2023, the Board, acting upon the unanimous recommendation of the Special Committee, unanimously (a) determined that the Merger as contemplated in the Merger Agreement and the Plan of Merger is fair to and in the best interests of the Company and the Unaffiliated Security Holders and it is advisable for the Company to enter into the Merger Agreement, the Plan of Merger and the Limited Guarantees and to consummate the Transactions, (b) authorized and approved the Merger Agreement, the Plan of Merger, the Limited Guarantees and the Transactions, and (c) resolved to recommend the approval and authorization of the Merger Agreement, the Plan of Merger and the consummation of the Transactions
 
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to the shareholders of the Company and directed that the Merger Agreement, the Plan of Merger and the consummation of the Transactions be submitted to the shareholders of the Company for authorization and approval.
Accordingly, the Board recommends that you vote FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including (i) the Merger, (ii) the variation of the authorized share capital of the Company from US$50,000 divided into 2,500,000,000 ordinary shares of a par value of US$0.00002 per share to US$50,000 divided into 500,000,000 ordinary shares of a par value of US$0.0001 each, at the Effective Time (the “Variation of Capital”), and (iii) the amendment and restatement of the existing memorandum and articles of association by deletion in their entirety and the substitution in their place of the new memorandum and articles of association effective at the Effective Time, in the form attached as Appendix II to the Plan of Merger (the “Adoption of Amended M&A”), FOR the proposal to authorize each of the directors of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger, the Variation of Capital, and the Adoption of Amended M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.
The Merger cannot be completed unless the Merger Agreement, the Plan of Merger and the Transactions are authorized and approved by a special resolution (as defined in the Cayman Islands Companies Act and the memorandum and articles of association) of the Company passed by an affirmative vote of holders of Shares (including Shares represented by ADSs) representing at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy as a single class at the extraordinary general meeting or any adjournment or postponement thereof. Pursuant to the Support Agreement, the Rollover Shareholders have agreed to vote all of the Rollover Shares and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholders after the date thereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, which, as of the date hereof, collectively represent approximately 59.7% of the voting power of the total issued and outstanding Shares (excluding for the purpose of this calculation, the Shares they may acquire through the exercise of Company share incentive awards within 60 days of the date hereof). Accordingly, based on             Shares expected to be issued and outstanding on            , the record date for voting Shares at the extraordinary general meeting (the “Share Record Date”),             Shares owned by the shareholders of the Company other than the Rollover Shares as of the Share Record Date and ADS holders must be voted in favor of the execution of the Merger Agreement, the Plan of Merger and the Transactions in order to satisfy the requirement of the affirmative vote of at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy as a single class at the extraordinary general meeting of the Company’s shareholders in accordance with Section 233(6) of the Cayman Islands Companies Act and the memorandum and articles of association of the Company, assuming all shareholders of the Company will be present and voting in person or by proxy at the extraordinary general meeting and the Rollover Shareholders will vote all Rollover Shares and newly acquired Shares in favor of such special resolutions. To the knowledge of the Company, the Rollover Shareholders and certain other shareholders of the Company affiliated to the Rollover Shareholders own more than             Shares that are not Rollover Shares, and they may vote those Shares in favor of the execution of the Merger Agreement, the Plan of Merger and the consummation of the Transactions.
The accompanying proxy statement provides detailed information about, among other proposals, the Merger and the extraordinary general meeting. We encourage you to read the entire document and all of the attachments and other documents referred to or incorporated by reference herein carefully. You may also obtain more information about the Company from documents the Company has filed with the United States Securities and Exchange Commission (the “SEC”), which are available for free at the SEC’s website at www.sec.gov.
Rollover Shareholders who are registered shareholders of the Company have the right to demand poll voting at the extraordinary general meeting pursuant to the memorandum and articles of association of the Company, and will exercise such right during the meeting. Accordingly, the voting is expected to take place by
 
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poll voting. The effect of poll voting is that the number of votes each holder has will depend on the number of Shares held by such holder. If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on the proxy card. Whether or not you plan to attend the extraordinary general meeting, please complete the accompanying proxy card, in accordance with the instructions set forth on the proxy card, as promptly as possible. The deadline to lodge your proxy card is             at         a.m. (Beijing Time). Each registered holder of Shares has one vote for each Share held as of 5 p.m. New York City time on the Share Record Date.
Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Shares in person. Please note, however, that if you hold your Shares through a financial intermediary such as a broker, bank or nominee, you must rely on the procedures of the financial intermediary through which you hold your Shares if you wish to vote at the extraordinary general meeting.
The Company will instruct the ADS Depositary to deliver to holders of ADS as of the close of business in the New York City on             (the “ADS Record Date”) an ADS Voting Instruction Card, and holders of ADS as of the ADS Record Date will have the right to instruct the ADS Depositary (either directly if ADSs are held directly on the books and records of the ADS Depositary or indirectly through a bank, brokerage or other securities intermediary if ADSs are held by any of them on behalf of a holder of ADSs) how to vote the Shares underlying their ADSs at the extraordinary general meeting, subject to and in accordance with the terms of the Deposit Agreement. A copy of the form Deposit Agreement is available free of charge at the SEC’s website at www.sec.gov.
ADS holders registered in the ADS Depositary’s books are strongly urged to sign, complete and return the ADS Voting Instruction Card to the ADS Depositary in accordance with the instructions printed thereon and in the Depositary’s notice, as soon as possible and, in any event, so as to be received by the ADS Depositary no later than 12:00 p.m. (New York City time) on             (or if the extraordinary general meeting is adjourned, such later date as may be notified by the Company or the ADS Depositary). ADS holders holding through brokers or other securities intermediaries are strongly urged to return voting instructions as instructed and to be received by the cutoff date and time provided by their respective broker or other securities intermediaries. Each broker and other intermediary will set its own cutoff date and time to receive instructions.
As the registered holder of the Shares represented by ADSs, upon the timely receipt from an ADS holder as of the ADS Record Date of voting instructions in the manner specified by the ADS Depositary, the ADS Depositary will endeavor to vote (or to cause the vote of) (in person or by proxy), in so far as practicable and permitted under applicable law, the provisions of the Deposit Agreement, the memorandum and articles of association of the Company and the provisions of the Shares, the Shares represented by ADSs at the extraordinary general meeting in accordance with the voting instructions timely received (or deemed received) from holders of ADSs as of the ADS Record Date. The ADS Depositary will not itself exercise any voting discretion in respect of any Shares represented by ADSs and it will not vote any Shares represented by ADSs other than in accordance with signed voting instructions from the relevant ADS holder.
Holders of ADSs will not be able to attend or vote at the extraordinary general meeting directly (whether in person or by proxy) unless they surrender their ADSs to the ADS Depositary for cancellation and delivery of the corresponding Shares and become registered in the Company’s register of members as holders of Shares prior to the close of business in the New York City on the Share Record Date. ADS holders who wish to surrender their ADSs for cancellation and attend and vote at the extraordinary general meeting need to make arrangements with their broker or custodian to deliver the ADSs to the ADS Depositary for cancellation before the close of business in New York City on             together with (a) delivery instructions for the corresponding Shares represented by such ADSs (including, if applicable, the name and address of person who will be the registered holder of such Shares), and (b) payment of ADS Depositary’s fees associated with such cancellation (US$0.05 per ADS), which will not be borne by the Company, and any applicable taxes. If you hold your ADSs in an account with a broker or other securities intermediary, please promptly contact your broker, or other intermediary to find out what actions you need to take to instruct the broker, or other intermediary, to surrender the ADSs on your behalf. Upon surrender of the ADSs, the ADS Depositary will direct The Hong Kong and Shanghai Banking Corporation Limited., Hong Kong branch, the custodian
 
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holding the Shares, to deliver, or cause the delivery of, the Shares represented by the ADSs so cancelled to or upon the written order of the person(s) designated in the order delivered to the ADS Depositary for such purpose. If you hold ADSs through a broker or other securities intermediary, you should contact that broker or intermediary to determine the date by which you must instruct them to act in order that the necessary processing can be completed in time. If after the registration of Shares in your name you wish to receive a certificate evidencing the Shares registered in your name, you will need to request the Company to issue and mail, or cause to be issued and mailed, a certificate to your attention. If the Merger is not consummated, the Company will continue to be a publicly traded company in the United States and the ADSs will continue to be listed on NASDAQ. Shares are not listed and cannot be traded on any stock exchange other than NASDAQ, and in such case only as represented by ADSs. As a result, if you have surrendered your ADSs for cancellation to attend the extraordinary general meeting and the Merger is not consummated and you wish to be able to sell your Shares on a stock exchange, you will need to deposit your Shares into the Company’s ADS program for the issuance of the corresponding number of ADSs, subject to the terms and conditions of applicable law and the Deposit Agreement, including, among other things, payment of relevant fees of the ADS Depositary for the issuance of ADSs (US$0.05 per ADS issued), applicable share transfer taxes (if any), and related charges pursuant to the Deposit Agreement.
Shareholders who dissent from the Merger will have the right to seek appraisal and payment of the fair value of their Shares as determined by the Grand Court of the Cayman Islands pursuant to Section 238 of the Cayman Islands Companies Act if the Merger takes effect, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and comply with all subsequent procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex D to the accompanying proxy statement. The fair value of your Shares as determined by the Grand Court of the Cayman Islands under the Cayman Islands Companies Act could be more than, the same as, or less than the Merger consideration you would receive pursuant to the Merger Agreement if you do not exercise dissenters’ rights with respect to your Shares.
ADS HOLDERS WILL NOT HAVE THE RIGHT TO EXERCISE DISSENTERS’ RIGHTS AND RECEIVE PAYMENT OF THE FAIR VALUE OF THE SHARES UNDERLYING THEIR ADSs. THE ADS DEPOSITARY WILL NOT EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTERS’ RIGHTS FOR AND ON BEHALF OF THE ADS HOLDERS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF AN ADS HOLDER REQUESTS THE ADS DEPOSITARY TO DO SO. ADS HOLDERS WISHING TO EXERCISE DISSENTERS’ RIGHTS MUST SURRENDER THEIR ADSs BEFORE 10:00 A.M. (NEW YORK CITY TIME) ON             TO THE ADS DEPOSITARY FOR CONVERSION INTO SHARES, PAY THE ADS DEPOSITARY’S FEES REQUIRED FOR THE CANCELLATION OF THEIR ADSs, PROVIDE INSTRUCTIONS FOR THE REGISTRATION OF THE CORRESPONDING SHARES IN THE COMPANY’S REGISTER OF MEMBERS AND DELIVERY INSTRUCTIONS FOR THE CORRESPONDING SHARES, AND CERTIFY THAT THEY EITHER (I) BENEFICIALLY OWNED THE ADSs AS OF THE ADS RECORD DATE AND HAVE NOT GIVEN, AND WILL NOT GIVE, VOTING INSTRUCTIONS AS TO THEIR ADSs (OR HAVE CANCELLED ALL VOTING INSTRUCTIONS PREVIOUSLY GIVEN) OR HAVE GIVEN VOTING INSTRUCTIONS TO THE ADS DEPOSITARY AS TO THE ADSs BEING CANCELLED BUT UNDERTAKE NOT TO VOTE THE CORRESPONDING SHARES AT THE EXTRAORDINARY GENERAL MEETING, OR (II) DID NOT BENEFICIALLY OWN THE RELEVANT ADSs AS OF THE ADS RECORD DATE AND UNDERTAKE NOT TO VOTE THE CORRESPONDING SHARES AT THE EXTRAORDINARY GENERAL MEETING, AND BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. FOR THE AVOIDANCE OF DOUBT, ANY ADS HOLDERS WHO CONVERT THEIR ADSs INTO SHARES AFTER THE SHARE RECORD DATE WILL NOT BE ENTITLED TO ATTEND OR TO VOTE AT THE EXTRAORDINARY GENERAL MEETING, BUT WILL BE ENTITLED TO EXERCISE DISSENTERS’ RIGHTS IF THEY BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING, IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE. AFTER CONVERTING THEIR ADSs AND BECOMING REGISTERED HOLDERS OF SHARES, SUCH FORMER ADS HOLDERS MUST COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING DISSENTERS’ RIGHTS WITH
 
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RESPECT TO THE SHARES UNDER SECTION 238 OF THE CAYMAN ISLANDS COMPANIES ACT. IF THE MERGER IS NOT CONSUMMATED, THE COMPANY WOULD CONTINUE TO BE A PUBLICLY TRADED COMPANY IN THE UNITED STATES AND THE ADSs WOULD CONTINUE TO BE LISTED ON NASDAQ. THE COMPANY’S SHARES ARE NOT LISTED AND CANNOT BE TRADED ON ANY STOCK EXCHANGE OTHER THAN NASDAQ, AND IN SUCH CASE ONLY IN THE FORM OF ADSs. AS A RESULT, IF A FORMER ADS HOLDER HAS SURRENDERED HIS, HER OR ITS ADSs FOR CANCELLATION TO THE ADS DEPOSITARY IN ORDER TO EXERCISE DISSENTERS’ RIGHTS AND THE MERGER IS NOT CONSUMMATED AND SUCH FORMER ADS HOLDER WISHES TO BE ABLE TO SELL HIS, HER OR ITS SHARES ON A STOCK EXCHANGE, SUCH FORMER ADS HOLDER WILL NEED TO DEPOSIT HIS, HER OR ITS SHARES INTO THE COMPANY’S ADS PROGRAM FOR THE ISSUANCE OF THE CORRESPONDING NUMBER OF ADSs, SUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND THE DEPOSIT AGREEMENT, INCLUDING, AMONG OTHER THINGS, PAYMENT OF RELEVANT FEES OF THE ADS DEPOSITARY FOR THE ISSUANCE OF ADSs ($0.05 PER ADS ISSUED), APPLICABLE SHARE TRANSFER TAXES (IF ANY), AND RELATED CHARGES PURSUANT TO THE DEPOSIT AGREEMENT.
Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this letter or in the accompanying notice of the extraordinary general meeting or proxy statement. Any representation to the contrary is a criminal offense.
If you have any questions or need assistance voting your Shares or ADSs, please contact our Investor Relations Department by email at ir@genetronhealth.com. ADS holders who have any questions should contact the ADS Depositary using the contact details provided on the ADS Voting Instruction Card. ADS holders who hold ADSs indirectly should contact their bank, broker, financial institution or administrator through which such ADSs are held.
Thank you for your cooperation and continued support.
Sincerely, Sincerely,
Wing Kee Lau
Chairman of the Special Committee
Sizhen Wang
Chairman of the Board
The accompanying proxy statement is dated            , and is first being mailed to the Company’s shareholders and ADS holders on or about            .
 
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GENETRON HOLDINGS LIMITED
NOTICE OF EXTRAORDINARY GENERAL MEETING OF
SHAREHOLDERS TO BE HELD ON            
Dear Shareholder:
Notice is hereby given that an extraordinary general meeting of the shareholders of Genetron Holdings Limited (referred to herein alternately as the “Company”, “us”, “we” or other terms correlative thereto) will be held on             at             a.m. (Beijing Time) at 1/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, People’s Republic of China.
Only registered holders of ordinary shares of the Company, par value US$0.00002 per share (each, a “Share”), as of 5 p.m. New York City time on             (the “Share Record Date”) or their proxy holders are entitled to attend and vote at this extraordinary general meeting or any adjournment thereof. At the extraordinary general meeting, you will be asked to consider and vote upon the following resolutions:

as special resolutions:
THAT the Agreement and Plan of Merger, dated as of October 11, 2023 (the “Merger Agreement”), among the Company, New Genetron Holding Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”) and Genetron New Co Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and cease to exist, with the Company continuing as the surviving company and becoming a wholly-owned subsidiary of Parent (such Merger Agreement being in the form attached as Annex A to the proxy statement accompanying this notice of extraordinary general meeting and which will be produced and made available for inspection at the extraordinary general meeting), the plan of merger required to be registered with the Registrar of Companies of the Cayman Islands in connection with the Merger (the “Plan of Merger”) (such Plan of Merger being substantially in the form attached as Annex B to the proxy statement accompanying this notice of extraordinary general meeting and which will be produced and made available for inspection at the extraordinary general meeting), and the consummation of the transactions contemplated by the Merger Agreement and the Plan of Merger (collectively, the “Transactions”) including (i) the Merger, (ii) the variation of the authorized share capital of the Company from US$50,000 divided into 2,500,000,000 ordinary shares of a par value of US$0.00002 per share to US$50,000 divided into 500,000,000 ordinary shares of a par value of US$0.0001 each, at the Effective Time (the “Variation of Capital”), and (iii) the amendment and restatement of the existing memorandum and articles of association of the Company by deletion in their entirety and the substitution in their place of the new memorandum and articles of association effective at the effective time of the Merger (the “Effective Time”), in the form attached as Appendix II to the Plan of Merger (the “Adoption of Amended M&A”), be approved and authorized by the Company;
THAT each director of the Company be authorized to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Variation of Capital and the Adoption of Amended M&A; and

if necessary, as an ordinary resolution:
THAT the extraordinary general meeting be adjourned in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.
Please refer to the accompanying proxy statement, which is attached to and made a part of this notice. A list of the Company’s shareholders will be available at its principal executive offices at 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China, during ordinary business hours for the two business days immediately prior to the extraordinary general meeting.
Pursuant to the rollover and support agreement (the “Support Agreement”) entered into on October 11, 2023, each of Mr. Sizhen Wang (“Mr. Wang”), Tianjin Kangyue Business Management Partnership (Limited
 
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Partnership) (“Tianjin Kangyue”), CICC Healthcare Investment Fund, L.P. (“CICC Healthcare Investment”), FHP Holdings Limited, Hai Yan, Genetron Voyage Holdings Limited, Genetron United Holdings Limited, Eugene Health Limited, IN Healthcare Limited, EASY BENEFIT INVESTMENT LIMITED, Tianjin Yuanjufu Business Management Partnership (Limited Partnership), EASY BEST INVESTMENT LIMITED, Tianjin Genetron Jun’an Business Management Partnership (Limited Partnership), Tianjin Genetron Juncheng Business Management Partnership (Limited Partnership), Genetron Alliance Holdings Limited, Genetron Discovery Holdings Limited, Vivo Capital Fund IX, L.P., Alexandria Venture Investments, LLC, Tianjin Tianshu Xingfu Corporation Management L.P., Eminence Legend Consultancy (HK) Limited, Ke Li, Xiao Yu Lu, Zuo Xiang, Peng Pamela Yan, Hong Chen, Jiayin Zhang, Genetron Health (Hong Kong) Company Limited, SUPER SAIL, LLC, Wei-Wu He, Huiying Memorial Foundation, WEALTH FAITH INVESTMENT LTD., Qijing Li, Xiao Fan Wang, Jing Zhu, Kensington Trust Singapore Limited ato IS&P (First Names Singapore) Retirement Fund — FN45, Kevin Ying Hong and EVER PRECISE INVESTMENTS LIMITED (collectively, the “Rollover Shareholders”) will vote all of 277,149,985 Shares (including Share represented by ADSs) held by the Rollover Shareholders as of October 11, 2023 (collectively, the “Rollover Shares”) and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholder after the date thereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, which, as of the date hereof, collectively represent approximately 59.7% of the voting power of the total issued and outstanding Shares (excluding for the purpose of this calculation, the Shares they may acquire through the exercise of Company share incentive awards within 60 days of the date hereof). To the knowledge of the Company, the Rollover Shareholders and certain other shareholders of the Company affiliated to the Rollover Shareholders own more than             Shares that are not Rollover Shares, and they may vote those Shares in favor of the execution of the Merger Agreement, the Plan of Merger and the Transactions.
After careful consideration and upon the unanimous recommendation of the Special Committee, the Board (a) determined that the Merger as contemplated in the Merger Agreement and the Plan of Merger is fair to and in the best interests of the Company and its shareholders and ADS holders, other than shareholders and ADS holders who are affiliates of the Company and the holders of Excluded Shares (as defined in the Merger Agreement) (such unaffiliated shareholders and ADS holders are referred to herein as the “Unaffiliated Security Holders”), and it is advisable for the Company to enter into the Merger Agreement, the Plan of Merger and the limited guarantees by Tianjin Kangyue, CICC Healthcare Investment, Surrich International Company Limited, Wuxi Huihongyingkang Investment Partnership (Limited Partnership), CCB (Beijing) Investment Fund Management Co., Ltd. and Wealth Strategy Holding Limited (the “Sponsors”) in favor of the Company or one of its wholly-owned subsidiaries pursuant to which the Sponsors will guarantee certain payment obligations of Parent under the Merger Agreement (the “Limited Guarantees”) and to consummate the Transactions, (b) authorized and approved the Merger Agreement, the Plan of Merger, the Limited Guarantees and the consummation of the Transactions, and (c) resolved to recommend the approval and authorization of the Merger Agreement, the Plan of Merger, and the consummation of the Transactions to the shareholders of the Company and directed that the Merger Agreement, the Plan of Merger and the consummation of the Transactions be submitted to a vote of the shareholders of the Company for authorization and approval. After careful consideration and upon the unanimous recommendation of the Special Committee composed solely of directors unaffiliated to any member of the management of the Company or any other participant of the Transactions, the Board recommends that you vote FOR the proposal to authorize and approve the execution, delivery and performance of the Merger Agreement the Plan of Merger and the consummation of the Transactions, including the Merger, the Variation of Capital, and upon the Merger becoming effective, the Adoption of Amended M&A, FOR the proposal to authorize each director of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger, the Variation of Capital, and upon the Merger becoming effective, the Adoption of Amended M&A, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.
Regardless of the number of Shares that you own, your vote is very important. The Merger cannot be completed unless the Merger Agreement, the Plan of Merger and the Transactions are authorized and approved by a special resolution (as defined in the Companies Act (As Revised) of the Cayman Islands (the “Cayman Islands Companies Act”)) of the Company passed by an affirmative vote of holders of Shares
 
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(including Shares represented by ADSs) representing at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy (or in the case of corporations, by their duly authorized representatives), as a single class at the extraordinary general meeting or any adjournment or postponement thereof. Pursuant to the Support Agreement, the Rollover Shareholders have agreed to vote all of the Rollover Shares and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholder after the date thereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Transactions, which, as of the date hereof, collectively represent approximately 59.7% of the voting power of the total issued and outstanding Shares (excluding for the purpose of this calculation, the Shares they may acquire through the exercise of Company share incentive awards within 60 days of the date hereof). Accordingly, based on            Shares expected to be issued and outstanding on            , the record date for voting Shares at the extraordinary general meeting (the “Share Record Date”)             Shares owned by the shareholders of the Company other than the Rollover Shares as of the Share Record Date and ADS holders must be voted in favor of the execution of the Merger Agreement and the Plan of Merger, and the Transactions in order to satisfy the requirement of the affirmative vote of at least two-thirds of the votes cast by such holders as, being entitled to do so, present and voting in person or by proxy as a single class at the extraordinary general meeting of the Company’s shareholders in accordance with Section 233(6) of the Cayman Islands Companies Act and the memorandum and articles of association of the Company, assuming all shareholders of the Company will be present and voting in person or by proxy at the extraordinary general meeting and the Rollover Shareholders will vote all Rollover Shares and newly acquired Shares in favor of such special resolutions. To the knowledge of the Company, the Rollover Shareholders and certain other shareholders of the Company affiliated to the Rollover Shareholders own more than             Shares that are not Rollover Shares, and they may vote those Shares in favor of the execution of the Merger Agreement, the Plan of Merger and the Transactions.
Regardless of whether you plan to attend the extraordinary general meeting in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. To be valid, your proxy card must be completed, signed, scanned and returned to the Company’s offices (to the attention of: Investor Relations Department) at ir@genetronhealth.com, no later than             a.m. (Beijing Time),            . The proxy card is the “instrument of proxy” and the “instrument appointing a proxy” as referred to in the Company’s articles of association. Rollover Shareholders who are registered shareholders of the Company have the right to demand poll voting at the meeting, and will exercise such right during the meeting. Accordingly, the voting is expected to take place by poll voting. The effect of poll voting is that the number of votes each holder has will depend on the number of Shares held by such holder. If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on the proxy card. Each registered holder of Shares has one vote for each Share held as of 5 p.m. New York City time on the Share Record Date. If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on the proxy card.
Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Shares in person. Please note, however, that if your Shares are registered in the name of a broker, bank or other nominee and you wish to vote at the extraordinary general meeting in person, you must obtain from the record holder a proxy issued in your name.
If you abstain from voting, fail to cast your vote in person, fail to complete and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank or other nominee, your vote will not be counted.
When proxies are properly dated, executed and returned by holders of Shares, the Shares they represent will be voted at the extraordinary general meeting in accordance with the instructions of such shareholders. If no specific instructions are given by such shareholders, such Shares will be voted “FOR” the proposals as described above, unless you appoint a person other than the chairman of the meeting as your proxy, in which case the Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines.
 
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If you own ADSs as of the close of business in New York City on             (the “ADS Record Date”) (and do not surrender such ADSs for cancellation and become a registered holder of the Shares underlying such ADSs as explained below), you cannot vote at the extraordinary general meeting directly, but you may give voting instructions to The Bank of New York Mellon, (the “ADS Depositary”) (either directly if ADSs are held directly on the books and records of the ADS Depositary or indirectly through a bank, brokerage or other securities intermediary if ADSs are held by any of them on behalf of a holder of ADSs), in its capacity as the ADS Depositary and the holder of the Shares underlying your ADSs, how to vote the Shares underlying your ADSs by completing and signing the ADS voting instruction card and returning it in accordance with the instructions printed on it as soon as possible. The ADS Depositary must receive your instructions no later than 12:00 p.m. (New York City time) on             in order to ensure the Shares underlying your ADSs are properly voted at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other securities account, you must rely on the procedures of the broker, bank or other securities intermediary through which you hold your ADSs if you wish to vote. Your broker or other securities intermediary should inform you as the cutoff date and time for giving voting instructions.
Alternatively, if you own ADSs as of the close of business in New York City on the ADS Record Date, you may vote at the extraordinary general meeting directly if you surrender your ADSs to the ADS Depositary for cancellation and become a registered holder of the Shares underlying your ADSs prior to the close of business in the New York on            , the Share Record Date. If you wish to surrender your ADSs to the ADS Depositary for cancellation for the purpose of voting Shares directly, you need to make arrangements to deliver your ADSs to the ADS Depositary for cancellation before the close of business in New York City on            together with (a) delivery instructions for the corresponding Shares (name and address of person who will be the registered holder of such Shares), and (b) payment of the ADS cancellation fees (US$0.05 per ADS to be cancelled pursuant to the terms of the deposit agreement, dated as of June 18, 2020, by and among the Company, the ADS Depositary, and the holders and beneficial owners of ADSs issued thereunder (the “Deposit Agreement”)), which will not be borne by the Company, and any applicable taxes. If you hold your ADSs in an account with a broker or other securities intermediary, please promptly contact your broker, bank or other securities intermediary to find out what actions you need to take to instruct the broker, bank or other securities intermediary to surrender the ADSs for cancellation on your behalf. Upon surrender of the ADSs, the ADS Depositary will direct The Hong Kong and Shanghai Banking Corporation Limited., Hong Kong branch, the custodian holding the Shares, to deliver, or cause the delivery of, the Shares represented by the ADSs so cancelled to or upon the written order of the person(s) designated in the order delivered to the ADS Depositary for such purpose. It is difficult to predict how long the steps described above may take. ADS holders that wish to surrender the ADSs for cancellation to become registered holders of Shares are advised to take action as soon as possible.
Shareholders who dissent from the Merger in accordance with the Cayman Islands Companies Act will have the right to receive payment of the fair value of their Shares as determined by the Grand Court of the Cayman Islands pursuant to Section 238 of the Cayman Islands Companies Act if the Merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex D to the accompanying proxy statement. The fair value of their Shares as determined by the Grand Court of the Cayman Islands under the Cayman Islands Companies Act could be more than, the same as, or less than the Merger consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Shares. This proxy statement is not to be construed or taken as legal advice on Cayman Islands law. Shareholders who wish to exercise any rights under Section 238 of the Cayman Islands Companies Act, or otherwise, should obtain their own copy of the complete Cayman Islands Companies Act and seek legal advice from a law firm authorized to practice Cayman Islands law without delay.
ADS HOLDERS WILL NOT HAVE THE RIGHT TO EXERCISE DISSENTERS’ RIGHTS AND RECEIVE PAYMENT OF THE FAIR VALUE OF THE SHARES UNDERLYING THEIR ADSs. THE ADS DEPOSITARY WILL NOT EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTERS’ RIGHTS FOR AND ON BEHALF OF THE ADS HOLDERS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF AN ADS HOLDER REQUESTS THE ADS DEPOSITARY TO DO SO. ADS HOLDERS WISHING TO EXERCISE DISSENTERS’ RIGHTS MUST SURRENDER THEIR
 
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ADSs FOR CANCELLATION BEFORE 10:00 A.M. (NEW YORK CITY TIME) ON             TO THE ADS DEPOSITARY FOR CONVERSION INTO SHARES, PAY THE ADS DEPOSITARY’S FEES REQUIRED FOR THE CANCELLATION OF THEIR ADSs, PROVIDE INSTRUCTIONS FOR THE REGISTRATION OF THE CORRESPONDING SHARES IN THE COMPANY’S REGISTER OF MEMBERS AND DELIVERY INSTRUCTIONS FOR THE CORRESPONDING SHARES, AND CERTIFY THAT THEY EITHER (I) BENEFICIALLY OWNED THE ADSs AS OF THE ADS RECORD DATE AND HAVE NOT GIVEN, AND WILL NOT GIVE, VOTING INSTRUCTIONS AS TO THEIR ADSs (OR HAVE CANCELLED ALL VOTING INSTRUCTIONS PREVIOUSLY GIVEN) OR HAVE GIVEN VOTING INSTRUCTIONS TO THE ADS DEPOSITARY AS TO THE ADSs BEING CANCELLED BUT UNDERTAKE NOT TO VOTE THE CORRESPONDING SHARES AT THE EXTRAORDINARY GENERAL MEETING, OR (II) DID NOT BENEFICIALLY OWN THE RELEVANT ADSs AS OF THE ADS RECORD DATE AND UNDERTAKE NOT TO VOTE THE CORRESPONDING SHARES AT THE EXTRAORDINARY GENERAL MEETING, AND BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. FOR THE AVOIDANCE OF DOUBT, ANY ADS HOLDERS WHO CONVERT THEIR ADSs INTO SHARES AFTER THE SHARE RECORD DATE WILL NOT BE ENTITLED TO ATTEND OR TO VOTE AT THE EXTRAORDINARY GENERAL MEETING, BUT WILL BE ENTITLED TO EXERCISE DISSENTERS’ RIGHTS IF THEY BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING, IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE. AFTER CONVERTING THEIR ADSs AND BECOMING REGISTERED HOLDERS OF SHARES, SUCH FORMER ADS HOLDERS MUST COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING DISSENTERS’ RIGHTS WITH RESPECT TO THE SHARES UNDER SECTION 238 OF THE CAYMAN ISLANDS COMPANIES ACT. IF THE MERGER IS NOT CONSUMMATED, THE COMPANY WOULD CONTINUE TO BE A PUBLICLY TRADED COMPANY IN THE UNITED STATES AND THE ADSs WOULD CONTINUE TO BE LISTED ON NASDAQ. THE COMPANY’S SHARES ARE NOT LISTED AND CANNOT BE TRADED ON ANY STOCK EXCHANGE OTHER THAN NASDAQ, AND IN SUCH CASE ONLY IN THE FORM OF ADSs. AS A RESULT, IF A FORMER ADS HOLDER HAS SURRENDERED HIS, HER OR ITS ADSs FOR CANCELLATION TO THE ADS DEPOSITARY IN ORDER TO EXERCISE DISSENTERS’ RIGHTS AND THE MERGER IS NOT CONSUMMATED AND SUCH FORMER ADS HOLDER WISHES TO BE ABLE TO SELL HIS, HER OR ITS SHARES ON A STOCK EXCHANGE, SUCH FORMER ADS HOLDER WILL NEED TO DEPOSIT HIS, HER OR ITS SHARES INTO THE COMPANY’S ADS PROGRAM FOR THE ISSUANCE OF THE CORRESPONDING NUMBER OF ADSs, SUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND THE DEPOSIT AGREEMENT, INCLUDING, AMONG OTHER THINGS, PAYMENT OF RELEVANT FEES OF THE ADS DEPOSITARY FOR THE ISSUANCE OF ADSs (US$0.05 PER ADS ISSUED), APPLICABLE SHARE TRANSFER TAXES (IF ANY), AND RELATED CHARGES PURSUANT TO THE DEPOSIT AGREEMENT.
If you have any questions or need assistance voting your Shares, please contact our Investor Relations Department by email at ir@genetronhealth.com.
The Merger Agreement, the Plan of Merger and the Transactions are described in the accompanying proxy statement. Copies of the Merger Agreement and the Plan of Merger are included as Annex A and Annex B, respectively, to the accompanying proxy statement. We urge you to read the entire accompanying proxy statement carefully.
Notes:
1.
In the case of joint holders, any one of such joint holder may vote, either in person or by proxy (or in the case of corporations, by their duly authorized representatives), in respect of such share as if he, she or it were solely entitled thereto, but if more than one of such joint holders be present at the extraordinary general meeting the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the joint holders.
 
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2.
The instrument appointing a proxy must be in writing under the hand of the appointer or of his or her attorney duly authorized in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized to sign the same.
3.
A proxy need not be a member (registered shareholder) of the Company.
4.
The proxy card must be deposited in the manner set out in the notice of the extraordinary general meeting. A proxy card that is not deposited in the manner permitted will be invalid.
5.
Votes given in accordance with the terms of a proxy card will be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer was received by the Company at ir@genetronhealth.com, Attention: Investor Relations Department, at least two hours before the commencement of the extraordinary general meeting, or adjourned meeting at which such proxy is used.
BY ORDER OF THE BOARD OF DIRECTORS,
Sizhen Wang
 
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PROXY STATEMENT
Dated            
SUMMARY VOTING INSTRUCTIONS
Ensure that your shares of Genetron Holdings Limited can be voted at the extraordinary general meeting by submitting your proxy or contacting your broker, bank or other nominee.
If your shares are registered in the name of a broker, bank or other nominee:   check the voting instruction card forwarded by your broker, bank or other nominee to see which voting options are available or contact your broker, bank or other nominee in order to obtain directions as to how to ensure that your shares are voted at the extraordinary general meeting.
If your shares are registered in your name:   submit your proxy as soon as possible by signing, dating and returning the accompanying proxy card in the enclosed postage-paid envelope, so that your shares can be voted at the extraordinary general meeting in accordance with your instructions.
If you submit your signed proxy card without indicating how you wish to vote, the shares represented by your proxy will be voted in favor of the resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as your proxy, in which case the shares represented by your proxy will be voted (or not submitted for voting) as your proxy determines.
If you have any questions, require assistance with voting your proxy card, or need additional copies of proxy material, please contact our Investor Relations Department at ir@genetronhealth.com.
 
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SUMMARY TERM SHEET
This “Summary Term Sheet” and the “Questions and Answers About the Extraordinary General Meeting and the Merger” highlight selected information contained in this proxy statement regarding the Merger (as defined below) and may not contain all of the information that may be important to your consideration of the Merger and other transactions contemplated by the Merger Agreement (as defined below) and the Plan of Merger (as defined below). You should carefully read this entire proxy statement and the other documents to which this proxy statement refers for a more complete understanding of the matters being considered at the extraordinary general meeting. In addition, this proxy statement incorporates by reference important business and financial information about the Company. You are encouraged to read all of the documents incorporated by reference into this proxy statement and you may obtain such information without charge by following the instructions in “Where You Can Find More Information” beginning on page 102. In this proxy statement, the terms “the Company”, “us”, “we” or other terms correlative thereto refer to Genetron Holdings Limited. All references to “dollars”, “US$” and “$” in this proxy statement are to U.S. dollars. All references to “PRC” and “China” are to the People’s Republic of China.
The Parties Involved in the Merger
The Company
The Company is a leading precision oncology platform company in China that specializes in cancer molecular profiling and harnesses advanced technologies in molecular biology and data science to transform cancer treatment. The Company has developed a comprehensive oncology portfolio that covers the entire spectrum of cancer management, addressing needs and challenges from early screening, diagnosis and treatment recommendations, as well as continuous disease monitoring and care. Genetron Health also partners with global biopharmaceutical companies and offers customized services and products. The Company’s principal executive offices are located at 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, the People’s Republic of China. The Company’s telephone number at this address is (86) 10 5090-7500. The Company’s registered office is Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands.
For a description of the Company’s history, development, business, and organizational structure, please see the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022 filed with the SEC on May 12, 2023 (the “2022 Form 20-F”), which is incorporated herein by reference. Please see “Where You Can Find More Information” beginning on page 102 for a description of how to obtain a copy of the Company’s 2022 Form 20-F.
The Company is the issuer of ordinary shares, par value US$0.00002 per share (each, a “Share”), including the Shares represented by American depositary shares, each representing fifteen (15) Shares (each, an “ADS”).
Parent
New Genetron Holding Limited (“Parent”), an exempted company with limited liability incorporated under the laws of the Cayman Islands and an indirectly wholly-owned subsidiary of Mr. Wang, was formed for the purpose of arranging, entering into and completing the transactions contemplated by the Merger Agreement and the Plan of Merger, including the Merger (the “Transactions”). Parent does not currently hold any Shares (including Shares represented by ADSs) of the Company. The business address of Parent is the offices of ICS Corporate Services (Cayman) Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands. The telephone number of Parent is (86) 10 5090-7500.
Merger Sub
Genetron New Co Limited (“Merger Sub”), an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent, was formed for the purpose of arranging, entering into and completing the Transactions. Merger Sub does not currently hold any Shares (including Shares represented by ADSs) of the Company. The business address of Merger Sub is the offices of
 
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ICS Corporate Services (Cayman) Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands. The telephone number of Merger Sub is (86) 10 5090-7500.
Mr. Sizhen Wang
Mr. Sizhen Wang (“Mr. Wang”) is the chairman of the board of directors (the “Board”) and chief executive officer of the Company. Mr. Wang is a citizen of China. The business address of Mr. Wang is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. His business telephone number is (86) 10 5090-7500.
Tianjin Kangyue Business Management Partnership (Limited Partnership)
Tianjin Kangyue Business Management Partnership (Limited Partnership) (“Tianjin Kangyue”) is a partnership established in the People’s Republic of China. Its principal business is business management and it serves as a special purpose vehicle of CICC Kangrui to hold shares in the Company. The business address of Tianjin Kangyue is located at 113, Tower 2, Guotai Building, Yingbin Avenue (Ease Side), Tianjin Pilot Free Trade Zone (Central Business District), Tianjin, the People’s Republic of China. The telephone number of Tianjin Kangyue is (86) 10 6505-1166.
CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership)
CICC Kangrui (No.1) Ningbo Equity Investment Fund Partnership (Limited Partnership) (“CICC Kangrui”) is a partnership established in the People’s Republic of China. Its principal business is private equity investment. The business address of CICC Kangrui is located at Section A C0866, Room 401, Building 1, 88 Qixing Road, Meishan, Beilun District, Ningbo, Zhejiang, the People’s Republic of China. The telephone number of CICC Kangrui is (86) 10 6505-1166.
CICC Healthcare Investment Fund, L.P.
CICC Healthcare Investment Fund, L.P. (“CICC Healthcare Investment,” together with Tianjin Kangyue and CICC Kangrui, collectively, “CICC”) is an entity incorporated in the Cayman Islands. Its principal business is investment holding. The registered address of CICC Healthcare Investment is located at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The telephone number of CICC Healthcare Investment is (86) 10 6505-1166.
Surrich International Company Limited
Surrich International Company Limited (“Wuxi Capital”) is a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China. Wuxi Capital does not currently hold any Shares of the Company. Its principal business is making investment. The business address of Wuxi Capital is located at 1901-02, Shui On Centre, 6-8 Harbour Road, Wan Chai, Hong Kong SAR, the People’s Republic of China. The telephone number at this address is (852) 28611161.
Wuxi Huihongyingkang Investment Partnership (Limited Partnership)
Wuxi Huihongyingkang Investment Partnership (Limited Partnership) (“Wuxi Huihongyingkang”) is a limited partnership organized under the laws of the People’s Republic of China. Wuxi Huihongyingkang does not currently hold any Shares of the Company. Its principal business is making investment. Wuxi Huihongyingkang is controlled by Wuxi Huizhisheng (as defined below). The business address of Wuxi Huihongyingkang is located at Room 1918-3 North, No. 5 Zhihui Road, Huishan Economic Development Zone, Wuxi City, Jiangsu Province, the People’s Republic of China. The telephone number of Wuxi Huihongyingkang is (86) 15251531315.
Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership)
Wuxi Huizhisheng Enterprise Management Partnership (Limited Partnership) (“Wuxi Huizhisheng,” together with Wuxi Huihongyingkang, collectively, “Wuxi Huishan Capital”) is a limited partnership
 
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organized under the laws of the People’s Republic of China. Wuxi Huizhisheng does not currently hold any Shares of the Company. Its principal business is making investment. The general partner of Wuxi Huizhisheng is Mr. Yi Zhou. The business address of Wuxi Huizhisheng is located at Room 1802-5 North, No. 5 Zhihui Road, Huishan Economic Development Zone, Wuxi City, Jiangsu Province, the People’s Republic of China. The telephone number of Wuxi Huizhisheng is (86) 15251531315.
CCB (Beijing) Investment Fund Management Co., Ltd.
CCB (Beijing) Investment Fund Management Co., Ltd. (“CCB Investment”) is a limited liability company incorporated under the laws of the People’s Republic of China. CCB Investment does not currently hold any Shares of the Company. Its principal business is making investment. CCB Investment is wholly owned by CCB Trust (as defined below). The business address of CCB Investment is located at 3B8, 3rd Floor, Building 2, Zone 1, Naoshikou Street, Xicheng District, Beijing, 100031, the People’s Republic of China. The telephone number at this address is (86) 10 8314 2483.
CCB Trust Co., Ltd.
CCB Trust Co., Ltd. (“CCB Trust”, together with CCB Investment, collectively, “CCB”) is a limited liability company incorporated under the laws of the People’s Republic of China. CCB Trust does not currently hold any Shares of the Company. Its principal business is making investment. The business address of CCB Trust is located at Xingtai Building, No. 45 Jiushiqiao Street, Hefei, Anhui Province, 230071, the People’s Republic of China. The telephone number at this address is (86) 0551 6529 5516.
Wealth Strategy Group Limited
Wealth Strategy Group Limited (“Wealth Strategy Group”) is a company incorporated under the laws of the British Virgin Islands and is wholly owned by Mr. Hung Ka Kung. Its principal business is making investment. The business address of Wealth Strategy Group is located at 86/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong SAR, the People’s Republic of China. The telephone number of Wealth Strategy Group is (+852) 3651-7155.
Wealth Strategy Holding Limited
Wealth Strategy Holding Limited (“Wealth Strategy Holding,” and together with Wealth Strategy Group, “Wealth Strategy”) is a company incorporated under the laws of the Hong Kong SAR, the People’s Republic of China and wholly owned by Wealth Strategy Group. Wealth Strategy Holding does not currently hold any Shares of the Company. Its principal business is making investment. The business address of Wealth Strategy Holding is located at 86/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong SAR, the People’s Republic of China. The telephone number of Wealth Strategy Holding is (+852) 3651-7155.
Easy Benefit Investment Limited
Easy Benefit Investment Limited (“Easy Benefit”) is a company incorporated under the laws of the British Virgin Islands and wholly owned by Wealth Strategy Group. Its principal business is making investment. The business address of Easy Benefit is located at 86/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong SAR, the People’s Republic of China. The telephone number of Easy Benefit is (+852) 3651-7155.
Easy Best Investment Limited
Easy Best Investment Limited (“Easy Best,” together with Easy Benefit, collectively, “WSG Entities”) is a company incorporated under the laws of the British Virgin Islands and wholly owned by Wealth Strategy Group. Its principal business is making investment. The business address of Easy Best is located at 86/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong SAR, the People’s Republic of China. The telephone number of Easy Best is (+852) 3651-7155.
Mr. Hung Ka Kung
Mr. Hung Ka Kung (“Mr. Kung”) is a director and the shareholder of Wealth Strategy Group. Mr. Kung is a citizen of Hong Kong SAR, the People’s Republic of China. The business address of Mr. Kung is located
 
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at 86/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong SAR, the People’s Republic of China. His business telephone number is (+852) 3651-7155.
Dr. Hai Yan
Dr. Hai Yan (“Dr. Yan”) is the chief scientific officer and a director of the Company. Dr. Yan is a citizen of the United States. The business address of Dr. Yan is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. His business telephone number is (86) 10 5090-7500.
Dr. Yuchen Jiao
Dr. Yuchen Jiao (“Dr. Jiao”) is the chief technology officer of the Company. Dr. Jiao is a citizen of China. The business address of Dr. Jiao is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. His business telephone number is (86) 10 5090-7500.
Mr. Evan Ce Xu
Mr. Evan Ce Xu (“Mr. Xu”) is the chief financial officer of the Company. Mr. Xu is a citizen of Hong Kong SAR, the People’s Republic of China. The business address of Mr. Xu is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. His business telephone number is (86) 10 5090-7500.
Dr. Yun-Fu Hu
Dr. Yun-Fu Hu (“Dr. Hu”) is the chief medical officer of the Company. Dr. Hu is a citizen of the United States. The business address of Dr. Hu is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. His business telephone number is (86) 10 5090-7500.
Ms. Fengling Zhang
Ms. Fengling Zhang (“Ms. Zhang”) is the vice present of the Company. Ms. Zhang is a citizen of China. The business address of Ms. Zhang is 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China. Her business telephone number is (86) 10 5090-7500.
FHP Holdings Limited
FHP Holdings Limited (“FHP Holdings”) is a company incorporated under the laws of the British Virgin Islands and is wholly owned by Mr. Wang. Its principal business is making equity investment. The business address of FHP Holdings is located at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. Its business telephone number is (86) 10 5090-7500.
SUPER SAIL, LLC
SUPER SAIL, LLC (“Super Sail”) is a limited liability company incorporated under the laws of the state of Delaware, U.S. and wholly owned by Alliance Trust Company, Trustee of Super E Growth Trust, of which Mr. Wang is the settlor. Its principal business is making equity investment. The business address of Super Sail is located at 251 Little Falls Drive, Wilmington Delaware 19808, U.S. Its business telephone number is (86) 10 5090-7500.
Genetron Discovery Holdings Limited
Genetron Discovery Holdings Limited (“Genetron Discovery”) is a company incorporated under the laws of the British Virgin Islands of which Mr. Wang owns 50.8% equity interests. Its principal business is equity investment holding on behalf of management members of the Company. The business address of Genetron Discovery is located at Harneys Corporate Services Limited, Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. Its business telephone number is (86) 10 5090-7500.
 
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Genetron Alliance Holdings Limited
Genetron Alliance Holdings Limited (“Genetron Alliance”) is a company incorporated under the laws of the British Virgin Islands. Its principal business is equity investment holding on behalf of management members of the Company. The business address of Genetron Alliance is located at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. Its business telephone number is (86) 10 5090-7500.
Eugene Health Limited
Eugene Health Limited (“Eugene Health”) is a company incorporated under the laws of the British Virgin Islands and is wholly owned by Dr. Jiao. Its principal business is making equity investment. The registered address of Eugene Health is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. Its business telephone number is (86) 10 5090-7500.
During the last five years, none of the persons referred to above under the heading “The Parties Involved in the Merger”, and their directors and executive officers as listed in Annex E of this proxy statement has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Throughout this proxy statement, (i) Mr. Wang, Parent, Merger Sub, CICC, Wuxi Capital, Wuxi Huishan Capital, CCB, Wealth Strategy and Mr. Kung are collectively referred to herein as the “Buyer Group”, (ii) Tianjin Kangyue, CICC Healthcare Investment, Wuxi Capital, Wuxi Huihongyingkang, CCB Investment and Wealth Strategy Holding are collectively referred to herein as the “Sponsors”, (iii) Dr. Yan, Dr. Jiao, Mr. Xu, Dr. Hu and Ms. Zhang are collectively referred to herein as the “Management Filing Persons”, and (iv) FHP Holdings, Super Sail, Genetron Discovery, Genetron Alliance and Eugene Health are collectively referred to herein as the “Management Holding Entities.” Each of the members of the Buyer Group, WSG Entities, Management Filing Persons and Management Holding Entities is referred to herein as a “Participant”, and collectively, “Participants.”
The Merger (Page 72)
You are being asked to vote to authorize and approve the Agreement and Plan of Merger dated as of October 11, 2023 among the Company, Parent and Merger Sub (the “Merger Agreement”), and the plan of merger required to be registered with the Registrar of Companies of the Cayman Islands (the “Cayman Registrar”), in connection with the Merger (the “Plan of Merger”), pursuant to which, once the Merger Agreement and the Plan of Merger are approved and authorized by the requisite vote of the shareholders of the Company and the other conditions to the completion of the transactions contemplated by the Merger Agreement and the Plan of Merger are satisfied or waived in accordance with the terms of the Merger Agreement and the Plan of Merger, Merger Sub will be merged with and into the Company and cease to exist (the “Merger”), with the Company continuing as the surviving company (the “Surviving Company”).
The Surviving Company will be wholly owned by Parent, and will continue to do business under the name “Genetron Holdings Limited” following the Merger. Copies of the Merger Agreement and the form of the Plan of Merger are attached as Annex A and Annex B, respectively, to this proxy statement. You should read the Merger Agreement and the Plan of Merger in their entirety because they, and not this proxy statement, are the legal documents that govern the Merger.
Merger Consideration (Page 72)
Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each Share of the Company, issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares (as defined below) and Dissenting Shares (as defined below) will be cancelled in exchange for the right to receive US$0.272 in cash per Share without interest and net of any applicable withholding taxes (the “Per Share Merger Consideration”) and each ADS issued and outstanding immediately prior to the
 
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Effective Time, other than ADSs representing the Excluded Shares, if any, will represent the right to receive US$4.08 in cash per ADS, without interest and net of any applicable withholding taxes (already adjusted to reflect the change to ADS ratio, the “Per ADS Merger Consideration”). Notwithstanding the foregoing, if the Merger is completed, the following shares will be cancelled and cease to exist at the Effective Time but will not entitle the holders thereof to receive the consideration described in the immediately preceding sentence:
(a)
(i) 277,149,985 Shares (including Shares represented by ADSs) beneficially owned (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by (x) Mr. Wang, Tianjin Kangyue and CICC Healthcare Investment, and (y) FHP Holdings, Dr. Yan, Genetron Voyage Holdings Limited, Genetron United Holdings Limited, Eugene Health, IN Healthcare Limited, EASY BENEFIT, Tianjin Yuanjufu Business Management Partnership (Limited Partnership), EASY BEST, Tianjin Genetron Jun’an Business Management Partnership (Limited Partnership), Tianjin Genetron Juncheng Business Management Partnership (Limited Partnership), Genetron Alliance, Genetron Discovery, Vivo Capital Fund IX, L.P., Alexandria Venture Investments, LLC, Tianjin Tianshu Xingfu Corporation Management L.P., Eminence Legend Consultancy (HK) Limited, Ke Li, Xiao Yu Lu, Zuo Xiang, Peng Pamela Yan, Hong Chen, Jiayin Zhang, Genetron Health (Hong Kong) Company Limited, SUPER SAIL, Wei-Wu He, Huiying Memorial Foundation, WEALTH FAITH INVESTMENT LTD., Qijing Li, Xiao Fan Wang, Jing Zhu, Kensington Trust Singapore Limited ato IS&P (First Names Singapore) Retirement Fund — FN45, Kevin Ying Hong and EVER PRECISE INVESTMENTS LIMITED (collectively, the “Other Rollover Shareholders”, and together with Mr. Wang, Tianjin Kangyue and CICC Healthcare Investment, the “Rollover Shareholders”) as of October 11, 2023 (collectively, the “Rollover Shares”), (ii) Shares (including Shares represented by ADSs) held by Parent, Merger Sub and any of their respective affiliates, (iii) Shares (including Shares represented by ADSs) held by the Company or any subsidiary of the Company or held in the Company’s treasury, and (iv) 9,912,500 Shares (including Shares represented by ADSs) recorded under the name of the Bank of New York Mellon as a member in the register of members of the Company and reserved for issuance and allocation pursuant to 2019 Genetron Health Share Incentive Plan and 2019 Genetron Health Share Incentive Scheme (collectively, the “Company Share Plans”), in each case for (ii), (iii) and (iv), issued and outstanding immediately prior to the Effective Time, will be cancelled and cease to exist at the Effective Time without payment of any consideration or distribution therefor (collectively, the “Excluded Shares”); and
(b)
Shares that are issued and outstanding immediately prior to the Effective Time and that are held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the Merger, or dissenter rights, pursuant to Section 238 of the Companies Act (As Revised) of the Cayman Islands (the “Cayman Islands Companies Act”) (collectively, the “Dissenting Shares”, and holders of the Dissenting Shares collectively, the “Dissenting Shareholders”) will be cancelled and cease to exist at the Effective Time and the Dissenting Shareholders will not be entitled to receive the Per Share Merger Consideration and will be entitled to receive only the payment of the fair value of their Dissenting Shares as determined by the Grand Court of the Cayman Islands pursuant to Section 238 of the Cayman Islands Companies Act.
Treatment of Company Share Awards (Page 73)
At the Effective Time, the Company will (a) terminate the Company Share Plans and any relevant award agreements entered into under the Company Share Plans, and (b) provide for the treatment of each Company Option (as defined below) that is then outstanding and unexercised, whether or not vested or exercisable, and each Company Restricted Share and Company RSU (each as defined below) that is then outstanding, whether or not vested, as described below.
At the Effective Time, each holder of an option (each, a “Company Option”) to purchase Shares granted under the Company Share Plans that remains outstanding immediately prior to the Effective Time (whether vested or unvested), will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Option; (ii) each holder of a Company restricted share unit (each, a “Company RSU”) granted under the Company Share Plans that remains outstanding at the Effective
 
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Time (whether vested or unvested), will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company RSU; and (iii) each holder of a Company restricted share (each, a “Company Restricted Share”) granted under the Company Share Plans that remains outstanding at the Effective Time (whether vested or unvested), will be assumed by Parent and converted into an employee incentive award of Parent, on terms and conditions reasonably determined by Parent that comply with the Company Share Plans and the award agreement(s) with respect to such Company Restricted Share.
Notwithstanding the foregoing, each independent director of the Company that holds Company Options and/or Company Restricted Shares, whether vested or unvested, that are cancelled at the Effective Time will, in exchange therefor, be paid by the Surviving Company or one of its subsidiaries, as soon as practicable after the Effective Time pursuant to the Company’s ordinary payroll practices (but in any event no later than thirty days after the Effective Time), a cash amount (without interest and net of any applicable withholding taxes) determined as follows: (a) in the case of Company Options, an amount of cash equal to (i) the excess, if any, of (x) the Per Share Merger Consideration over (y) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Options, and (b) in the case of Company Restricted Shares, an amount of cash equal to (i) the excess, if any, of (A) the Per Share Merger Consideration over (B) the applicable exercise price, multiplied by (ii) the number of Shares underlying such Company Restricted Shares.
Purposes and Effects of the Merger (Page 45)
The purpose of the Merger is to enable Parent to acquire 100% ownership and control of the Company in a transaction in which the Company’s shareholders and ADS holders, other than holders of the Excluded Shares and Dissenting Shares, will be cashed out in exchange for the Per Share Merger Consideration or the Per ADS Merger Consideration, as applicable, so that Parent will bear the rewards and risks of the ownership of the Company after the Merger, including any future earnings and growth of the Company as a result of improvements to the Company’s operations or acquisitions of other businesses. See “Special Factors — Purposes of and Reasons for the Merger” beginning on page 45 for additional information.
The ADSs are currently listed on The Nasdaq Global Market (“NASDAQ”) under the symbol “GTH”. Following the consummation of the Merger, the Company will cease to be a publicly traded company and will be a privately held company wholly owned by Parent. Following the completion of the Merger, the ADSs will no longer be listed on any securities exchange or quotation system, including NASDAQ. See “Special Factors — Effects of the Merger on the Company” beginning on page 46 for additional information.
Plans for the Company after the Merger (Page 49)
The Participants anticipate that, after the Effective Time, the Company’s operations will be conducted substantially as they are currently being conducted, except that the Company will cease to be a publicly traded company and will instead be a wholly-owned subsidiary of Parent.
Following the completion of the Merger and the anticipated deregistration of the Shares and the ADSs, the Company will no longer be subject to the reporting requirements of the Exchange Act, or the compliance and reporting requirements of NASDAQ and the related direct and indirect costs and expenses.
Position of Participants as to the Fairness of the Merger (Page 32)
Each Participant believes that the Merger is fair, both substantively and procedurally, to the shareholders and ADS holders of the Company, other than shareholders and ADS holders who are affiliates of the Company and the holders of Excluded Shares (such unaffiliated shareholders and ADS holders are referred to herein as the “Unaffiliated Security Holders”). The Participants’ belief is based upon the factors discussed under the section entitled “Special Factors — Position of Participants as to the Fairness of the Merger” beginning on page 32.
Each Participant is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13E-3 and related rules under the Exchange Act. The views of each Participant as to the fairness of the Merger are not intended to be and should not be construed as a recommendation to
 
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any shareholder of the Company as to how that shareholder should vote on the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions.
Financing of the Merger (Page 50)
The Company and the Buyer Group estimate that the total amount of funds necessary to complete the Merger and the related transactions, excluding payment of fees and expenses in connection with the Merger, is anticipated to be approximately US$50.9 million, assuming no exercise of dissenters’ rights by shareholders of the Company. In calculating this amount, the Company and the Buyer Group did not consider the value of the Excluded Shares which will be cancelled for no cash consideration in the Merger.
The Buyer Group expects this amount to be provided through cash contribution by the Sponsors, in accordance with certain equity commitment letters entered into by Parent with the Sponsors dated October 11, 2023 (each an “Equity Commitment Letter”, and collectively, “Equity Commitment Letters”), pursuant to which the Sponsors have agreed, subject to the terms and conditions thereof, to provide or procure the provision of the financing amounts specified therein for the purpose of financing the Merger consideration. See “Special Factors — Financing of the Merger” beginning on page 50 for additional information.
Support Agreement (Page 52)
Concurrently with the execution of the Merger Agreement, the Rollover Shareholders and Parent entered into a rollover and support agreement (the “Support Agreement”), pursuant to which the Rollover Shareholders have agreed that (i) the Rollover Shares will be cancelled for no cash consideration in exchange for the newly issued ordinary shares of Parent as set forth in the Support Agreement, and (ii) the Rollover Shareholders will vote the Rollover Shares and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholder after the date hereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, in each case, upon the terms and conditions set forth therein. See “Special Factors — Support Agreement” beginning on page 52 for additional information.
Limited Guarantees (Page 51)
Concurrently with the execution and delivery of the Merger Agreement, each of the Sponsors executed and delivered a limited guarantee in favor of the Company or a wholly-owned subsidiary of the Company (each a “Limited Guarantee” and collectively, “Limited Guarantees”), pursuant to which such Sponsor agrees to guarantee the payment obligations of Parent under the Merger Agreement for the Parent Termination Fee and certain cost and expenses that, in each case, may become payable to the Company by Parent under certain circumstances and subject to the terms and conditions as set forth in the Merger Agreement. See “Special Factors — Limited Guarantee” beginning on page 51 for additional information.
Interim Investor Agreement (Page 52)
Concurrently with the execution and delivery of the Merger Agreement, Mr. Wang, the Sponsors, Parent and Merger Sub entered into an interim investor agreement (the “Interim Investor Agreement”), pursuant to which the parties thereto agreed to certain terms and conditions that will govern the actions of such parties and the relationship among such parties with respect to the Merger. See “Special Factors — Interim Investor Agreement” beginning on page 52 for additional information.
Opinion of the Special Committee’s Financial Advisor (Page 37)
Pursuant to an engagement letter dated September 2, 2022 (as amended by the addendum dated December 9, 2022 and the addendum dated October 5, 2023, the “D&P Engagement Letter”), the Special Committee engaged Kroll, LLC (“Duff & Phelps”), operating through its Duff & Phelps Opinions Practice, to serve as its independent financial advisor and to provide a fairness opinion in connection with the Merger. On October 11, 2023, Duff & Phelps rendered its oral opinion (which was subsequently confirmed in writing by the delivery of Duff & Phelps’ written opinion, dated as of October 11, 2023, addressed to the Special Committee) to the Special Committee, to the effect that, as of that date and based upon and subject to the procedures followed, assumptions made, factors and matters considered and qualifications and limitations on
 
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the review undertaken by Duff & Phelps as set forth in its opinion, the Per Share Merger Consideration to be received by the holders of Shares (other than the Excluded Shares, the Dissenting Shares and Shares represented by ADSs) and the Per ADS Merger Consideration to be received by the holders of ADSs (other than ADSs representing the Excluded Shares) in the Merger, were fair, from a financial point of view, to such holders (without giving effect to any impact of the Merger on any particular holder of Shares or ADSs other than in their capacity as holders of Shares or ADSs).
The opinion of Duff & Phelps was addressed to the Special Committee and only addressed the fairness from a financial point of view of the Per Share Merger Consideration to be received by holders of Shares (other than the Excluded Shares, the Dissenting Shares and Shares represented by ADSs) and the Per ADS Merger Consideration to be received by holders of ADSs (other than ADSs representing the Excluded Shares) in the Merger, and does not address any other aspect or implication of the Merger. The summary of the opinion of Duff & Phelps in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement and sets forth the procedures followed, assumptions made, factors and matters considered and qualifications and limitations on the review undertaken by Duff & Phelps in preparing its opinion. We encourage holders of Shares and ADSs to read carefully the full text of the written opinion of Duff & Phelps. However, the opinion of Duff & Phelps, the summary of the opinion and the related analyses set forth in this proxy statement are not intended to be, and do not constitute, advice or a recommendation to any shareholder or holder of ADSs, of the Company as to how to act or vote with respect to the Merger or any other matter.
See “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 37 for additional information.
Interests of the Company’s Executive Officers and Directors in the Merger (Page 54)
In considering the recommendation of the Special Committee and the Board, the Company’s shareholders should be aware that certain of the Company’s directors and executive officers have interests in the Transactions that are different from, and/or in addition to, the interests of the Company’s shareholders and ADS holders generally. These interests include:

the beneficial ownership of equity interests in Parent by Mr. Wang and other Management Filing Persons as a result of the Merger (if approved and consummated);

the potential enhancement or decline of the share value of the Surviving Company, of which Mr. Wang and other Management Filing Persons will have beneficial ownership as a result of the completion of the Merger, and future performance of the Surviving Company;

continued indemnification rights which will continue to be provided to the existing directors and officers of the Company following the completion of the Merger; and

the expected continuation of service of the executive officers of the Company with the Surviving Company in positions that are substantially similar to their current positions, allowing them to benefit from remuneration arrangements with the Surviving Company.
As of the date of this proxy statement, the directors and executive officers of the Company hold an aggregate of 136,662,925 Shares, 5,995,105 Company Options or Company Restricted Share that are vested or will be vested within 60 days after the date of this proxy statement.
The Special Committee and the Board were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the Merger Agreement and related matters. See “Special Factors — Interests of Certain Persons in the Merger” beginning on page 54 for additional information.
Conditions to the Merger (Page 85)
The consummation of the Merger is subject to the satisfaction or waiver (where permissible under applicable law) of the following conditions:

the Merger Agreement, the Plan of Merger and the Transactions being authorized and approved by the affirmative vote of holders of Shares (including Shares represented by ADSs) representing at least
 
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two-thirds of the voting power of the Shares present and voting in person or by proxy as a single class at the shareholders meeting or any adjournment or postponement thereof (the “Requisite Company Vote”); and

no governmental authority of competent jurisdiction having enacted, issued, promulgated, enforced or entered any law or award, writ, injunction, determination, rule, regulation, judgment, decree or executive order, whether temporary, preliminary or permanent, which is then in effect or is pending or threatened, that has or would have the effect of enjoining, restraining, prohibiting or otherwise making illegal the consummation of the Merger; and

all requisite regulatory approvals shall have been obtained and be in full force and effect.
The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of the Company in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing of the Merger, subject to certain qualifications;

the Company having performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the closing date of the Merger;

the holders of 15% or less of the Shares shall have validly served an initial written objection to the Merger under Section 238(2) of the Cayman Islands Companies Act; provided, that, in the event that the holders of more than 15% of the Shares have validly served an initial written objection under Section 238(2) of the Cayman Islands Companies Act, this condition shall nevertheless be deemed satisfied if the holders of 15% or less of the Shares shall have then validly served a further written notice of dissent as required by Section 238(5) of the Cayman Islands Companies Act;

there not having been any Company Material Adverse Effect (as defined below) since the date of the Merger Agreement that is continuing; and

the Company having delivered to Parent a certificate, dated the closing date, signed by a senior executive officer of the Company, certifying as to the satisfaction of the conditions above.
The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of Parent and Merger Sub in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing of the Merger, subject to certain qualifications;

Parent and Merger Sub having performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by each of them on or prior to the closing date of the Merger; and

Parent having delivered to the Company a certificate, dated the closing date, signed by an executive officer of Parent, certifying as to the satisfaction of the conditions above.
Termination of the Merger Agreement (Page 86)
The Merger Agreement may be terminated at any time prior to Effective Time (if by the Company, acting at the direction of the Special Committee):
(a)
by mutual written consent of Parent and the Company;
(b)
by either Parent or the Company, if:

the Effective Time having not occurred on or before October 11, 2024 or such later date as extended pursuant to the Merger Agreement (the “Long Stop Date”);
 
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any governmental authority of competent jurisdiction having enacted, issued, promulgated, enforced or entered any final and non-appealable law or order, or taken any other final and non-appealable action, which has the effect of making consummation of the Transactions illegal or otherwise preventing or prohibiting consummation of the Transactions; or

the Requisite Company Vote having not been obtained at the Shareholders Meeting (as defined below) duly convened therefor and concluded or at any adjournment thereof,
in each case, provided that, this termination right is not available to any party whose failure to fulfill any of its obligations under the Merger Agreement has been a primary cause of, or resulted in, the failure of the applicable condition(s) being satisfied;
(c)
by the Company, upon:

a Parent Breach Termination Event;

a Parent Failure to Close Termination Event;

a Superior Proposal Termination Event; or

an Intervening Event Termination Event;
(d)
by Parent, upon any Parent Termination Event,
each as defined in the section entitled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 86.
U.S. Federal Income Tax Consequences (Page 57)
The receipt of cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. See “Special Factors — Material U.S. Federal Income Tax Consequences” beginning on page 57. The tax consequences of the Merger to an owner of Shares or ADSs will depend upon its particular circumstances.
PRC Income Tax Consequences (Page 60)
The Company does not believe that it is a resident enterprise under the PRC Enterprise Income Tax Law or that the gains recognized on the receipt of cash for the Shares or ADS by non-PRC tax resident holders should otherwise be subject to PRC income tax. However, there is uncertainty regarding whether the PRC tax authorities would deem the Company to be a resident enterprise. If the PRC tax authorities were to determine that the Company should be considered a resident enterprise, then gains recognized on the receipt of cash for our Shares or ADS pursuant to the Merger by our shareholders or ADS holders who are not PRC residents could be treated as PRC-sourced income that would be subject to PRC income tax at a rate of 10% in the case of enterprises or 20% in the case of individuals (subject to applicable tax treaty relief, if any), and, even in the event that the Company is not considered a resident enterprise, gains recognized on the receipt of cash for Shares or ADS will be subject to PRC tax if the holders of such Shares or ADS are PRC residents. It is unclear whether in practice non-PRC tax resident holders of our Shares or ADS will be able to obtain the benefits of any applicable tax treaty relief if the Company is considered a resident enterprise for PRC tax purposes. The Company does not believe that the Merger is without reasonable commercial purpose for purposes of Bulletin 7 and Bulletin 37, and, as a result, the Company will not withhold any PRC tax under Bulletin 7 and Bulletin 37 from the Merger consideration to be paid to holders of Shares or ADS. You should consult your own tax advisor for a full understanding of the tax consequences of the Merger to you, including any PRC tax consequences. Please see “Special Factors — PRC Income Tax Consequences” beginning on page 60 for additional information.
Cayman Islands Tax Consequences (Page 62)
The Cayman Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will be payable (either by direct assessment or withholding) to the government or other taxing authority in the Cayman Islands under the laws of the Cayman Islands in
 
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respect of the Merger or the receipt of cash for the Shares and ADSs under the terms of the Merger Agreement. This is subject to the qualification that (a) Cayman Islands stamp duty may be payable if any transaction documents are brought into or executed or produced before a court in the Cayman Islands, (b) registration fees will be payable to the Registrar of Companies in the Cayman Islands to register the Plan of Merger, the Variation of Capital, and the Adoption of Amended M&A, and (c) fees will be payable to the Cayman Islands Government Gazette Office to publish the notice of the Merger in the Cayman Islands Government Gazette.
Regulatory Matters (Page 57)
The Company does not believe that any material federal or state regulatory approvals, filings or notices are required in connection with effecting the Merger other than (a) the approvals, filings or notices required under the federal securities laws and applicable listing rules of NASDAQ, (b) the filing of the Plan of Merger (and supporting documentation as specified in the Cayman Islands Companies Act) with the Cayman Registrar and, in the event the Merger becomes effective, a copy of the Certificate of Merger being given to the shareholders and creditors of the Company and Merger Sub as at the time of the filing of the Plan of Merger and notice of the Merger being published in the Cayman Islands Government Gazette, and (c) ODI Approvals (as defined below).
Litigation Related to the Merger (Page 57)
We are not aware of any lawsuit that challenges the Merger, the Merger Agreement or the Transactions.
Accounting Treatment of the Merger (Page 57)
The Merger is expected to be accounted for as a business combination by Parent in accordance with Accounting Standards Codification 805 “Business Combinations”, initially at the fair value of the Company as of the date of the closing of the Merger, which is the date of the acquisition.
 
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QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE
MERGER
The following questions and answers address briefly some questions you may have regarding the extraordinary general meeting and the Merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.
Q:
When and where will the extraordinary general meeting be held?
A:
The extraordinary general meeting will take place on            , at             a.m. (Beijing Time) at 1/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, the People’s Republic of China.
Q:
What am I being asked to vote on?
A:
You will be asked to consider and vote on the following proposals:

as a special resolution, that the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including (i) the Merger, (ii) the variation of the authorized share capital of the Company from US$50,000 divided into 2,500,000,000 ordinary shares of a par value of US$0.00002 per share to US$50,000 divided into 500,000,000 ordinary shares of a par value of US$0.0001 each, at the Effective Time (the “Variation of Capital”), and (iii) the amendment and restatement of the existing memorandum and articles of association of the Company by deletion in their entirety and the substitution in their place of the new memorandum and articles of association effective at the Effective Time, in the form attached as Appendix II to the Plan of Merger (the “Adoption of Amended M&A”), be authorized and approved;

as a special resolution, that each of the directors of the Company be authorized to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Variation of Capital and the Adoption of Amended M&A; and

if necessary, as an ordinary resolution, that the extraordinary general meeting be adjourned in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.
Q:
What is the Merger?
A:
The Merger is a going private transaction pursuant to which Parent will acquire the Company. Once the Merger Agreement and the Plan of Merger are approved and authorized by the Company’s shareholders and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into the Company and cease to exist, with the Company continuing as the Surviving Company after the Merger. If the Merger is consummated, the Company will continue its operations as a privately held company beneficially owned by Parent and, as a result of the Merger, the ADSs will no longer be listed on NASDAQ.
Q:
When do you expect the Merger to be completed?
A:
We are working toward consummating the Merger as soon as possible and currently expect the Merger to consummate during the first quarter of 2024, after all conditions to the Merger have been satisfied or waived.
Q:
How does the Board recommend that I vote on the proposals?
A:
After careful consideration, and upon the unanimous recommendation of the Special Committee, the Board recommends you to vote:

FOR the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Variation of Capital and the Adoption of Amended M&A;
 
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FOR the proposal to authorize each of the directors of the Company to do all things necessary to give effect to the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, the Variation of Capital and the Adoption of Amended M&A; and

FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.
Q:
What vote of the Company’s shareholders is required to authorize and approve the Merger Agreement and the Plan of Merger?
A:
An affirmative vote of holders of Shares (including Shares represented by ADSs) representing at least two-thirds of the voting power of the outstanding Shares present and voting (as opposed to total outstanding Shares) in person or by proxy (or in the case of corporations, by their duly authorized representatives), as a single class at the extraordinary general meeting of the Company or any adjournment thereof is required to authorize and approve the Merger Agreement and the Plan of Merger, and the consummation of the Transactions.
Pursuant to the Support Agreement, the Rollover Shareholders have agreed to vote all of the Rollover Shares and any other Shares or equity securities of the Company acquired, whether beneficially or of record, by such Rollover Shareholder after the date thereof and prior to the Effective Time in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions, which, as of October 11, 2023, collectively represent approximately 59.7% of the voting power of the total issued and outstanding Shares (excluding for the purpose of this calculation, the Shares they may acquire through the exercise of Company share incentive awards within 60 days of the date of this proxy statement). To the knowledge of the Company, the Rollover Shareholders and certain other shareholders of the Company affiliated to the Rollover Shareholders own more than             Shares that are not Rollover Shares, and they may vote those Shares in favor of the execution of the Merger Agreement, the Plan of Merger and the consummation of the Transactions.
Q:
What vote of the Company’s shareholders is required to approve the proposal to adjourn the extraordinary general meeting, if necessary, to solicit additional proxies?
A:
An affirmative vote of holders of Shares representing a majority of the votes cast by such holders entitled to vote, present and voting in person or by proxy (or in the case of corporations, by their duly authorized representatives), as a single class at the extraordinary general meeting is required.
Q:
How do I vote if my Shares are registered in my name?
A:
If Shares are registered in your name as of 5 p.m. New York City time on             (the “Share Record Date”), you should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the accompanying return envelope as soon as possible so that it is received by the Company no later than             a.m. (Beijing Time),            , which is the deadline to lodge your proxy card for it to be valid, so that your Shares may be represented and voted at the extraordinary general meeting.
Alternatively, you can attend the extraordinary general meeting and vote in person. If your Shares are held by your broker, bank or other nominee, please see below for additional information.
Q:
How do I vote if I own ADSs?
A:
If you own ADSs as of the close of business in New York City on the ADS Record Date, you cannot vote at the extraordinary general meeting directly, but you may instruct the ADS Depositary (as the holder of Shares underlying your ADSs) (either directly if ADSs are held directly on the books and records of the ADS Depositary or indirectly through a bank, brokerage or other securities intermediary if ADSs are held by any of them on behalf of a holder of ADSs) how to vote the Shares underlying your ADSs by completing and signing the ADS voting instruction card and returning it in accordance with the
 
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instructions printed on it as soon as possible. The ADS Depositary must receive such instructions no later than 12:00 p.m. (New York City time) on             in order to ensure the Shares underlying your ADSs are properly voted at the extraordinary general meeting. If you hold ADSs through a broker or other securities intermediary, you must follow the instructions you receive from that intermediary has to how to give instructions and the cutoff date and time by which those instructions must be received.
Alternatively, if you own ADSs as of the close of business in New York City on the ADS Record Date, you may vote at the extraordinary general meeting directly if you surrender your ADSs for cancellation to the ADS Depositary and become a holder of the Shares underlying your ADSs prior to the close of business in the New York City on the Share Record Date.
Q:
If my Shares or ADSs are held in a brokerage, bank or other securities account, will my broker, bank or other securities intermediary vote my Shares or ADSs on my behalf?
A:
Your broker, bank or other securities intermediary will only vote your Shares or give voting instruction with respect to Shares underlying your ADSs on your behalf if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your broker, bank or other securities intermediary regarding how to instruct it to vote your Shares or ADSs. If you do not instruct your broker, bank or other securities intermediary how to vote your Shares that it holds, those Shares or ADSs will not be voted.
Q:
What will happen if I abstain from voting or fail to vote on the proposal to authorize and approve the Merger Agreement?
A:
If you abstain from voting, fail to cast your vote in person, fail to complete and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to the ADS Depositary, your broker, bank, or other securities intermediary, your vote will not be counted.
Q:
May I change my vote?
A:
Yes. If you are a holder of Shares, you may change your vote in one of the following three ways:

First, you may revoke a proxy by written notice of revocation given to the chairman of the extraordinary general meeting at least two hours before the commencement of the extraordinary general meeting. Any written notice revoking a proxy should also be sent to the Company’s offices at 1-2/F, Building 11, Zone 1, No. 8 Life Science Parkway, Changping District, Beijing, 102206, the People’s Republic of China, Attention: Investor Relations Department, at least two hours before the commencement of the extraordinary general meeting.

Second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to the Company so that it is received by the Company no later than            a.m. (Beijing Time) on            , which is the deadline to lodge your proxy card.

Third, you may attend the extraordinary general meeting and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the extraordinary general meeting.
Holders of ADSs may revoke their voting instructions by notification to the ADS Depositary in writing at any time prior to 12:00 p.m. (New York City time) on            . A holder of ADSs on the ADS Depositary’s register can do this in one of two ways:

First, a holder of ADSs can revoke its voting instructions by written notice of revocation timely delivered to the ADS Depositary.

Second, a holder of ADSs can complete, date and submit a new ADS voting instruction card to the ADS Depositary bearing a later date than the ADS voting instruction card sought to be revoked.
If you hold your Shares or ADSs through a broker, bank or other securities intermediary and you have instructed your broker, bank or other securities intermediary to vote your Shares or ADSs, you must follow directions received from the broker, bank or other securities intermediary to change your instructions.
 
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Q:
What should I do if I receive more than one set of voting materials?
A:
If you are a holder of record and your Shares or ADSs are registered in more than one name, you will receive more than one proxy or voting instruction or voting instruction card. Please submit each proxy card that you receive.
Q:
If I am a holder of certificated Shares or ADRs, should I send in my Share certificates or my ADRs now?
A:
No, please do NOT send in your certificates or ADRs now. After the Merger is completed, holders of certificated Shares will be sent a form of letter of transmittal with detailed written instructions for exchanging your share certificates for the Per Share Merger Consideration. Similarly, after the Merger is completed, ADR holders will be sent a form of letter of transmittal with detailed written instructions for exchanging your ADRs for the Per ADS Merger Consideration.
All holders of uncertificated Shares and uncertificated ADSs whose Shares or ADSs are held in book entry will automatically receive their net Merger consideration shortly after the Merger is completed without any further action required on the part of such holders. If your ADSs are held in a securities account with a broker or other securities intermediary, your broker or other securities intermediary will credit the net Merger consideration to your account.
Q:
Am I entitled to dissenters’ rights?
A:
Shareholders who dissent from the Merger will have the right to receive payment of the fair value of their Shares as determined by the Grand Court of the Cayman Islands pursuant to Section 238 of the Cayman Islands Companies Act if the Merger is consummated, but only if they deliver to the Company, before the vote to authorize and approve the Merger is taken at the extraordinary general meeting, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Act for the exercise of dissenters’ rights, a copy of which is attached as Annex D to this proxy statement. The fair value of each of their Shares as determined by the Grand Court of the Cayman Islands under the Cayman Islands Companies Act could be more than, the same as, or less than the Per Share Merger Consideration they would receive pursuant to the Merger Agreement if they do not exercise dissenters’ rights with respect to their Shares.
ADS holders will not have the right to exercise dissenters’ rights and seek appraisal and payment of the fair value of the Shares underlying their ADSs. The ADS Depositary will not attempt to exercise any dissenters’ rights for and on behalf of the ADS holders with respect to any of the Shares that it holds, even if an ADS holder requests the ADS Depositary to do so. ADS holders wishing to exercise dissenters’ rights must surrender their ADSs to the ADS Depositary for cancellation, pay the ADS Depositary’s fees required for the cancellation of their ADSs, provide instructions for the registration of the corresponding Shares in the Company’s register of members, and certify that they have not given, and will not give, voting instructions as to their ADS (or, alternatively, that they will not vote the corresponding Shares) before             a.m. (New York City time) on            , and become registered holders of Shares prior to the vote to authorize and approve the Merger is taken at the extraordinary general meeting. Thereafter, such former ADS holders must comply with the procedures and requirements for exercising dissenters’ rights with respect to the Shares under Section 238 of the Cayman Islands Companies Act.
We encourage you to read the section of this proxy statement entitled “Dissenters’ Rights” beginning on page 91 as well as “Annex D — Cayman Islands Companies Act (As Revised) — Section 238” to this proxy statement carefully. This proxy statement is not to be construed or taken as legal advice on Cayman Islands law. Shareholders who wish to exercise any rights under Section 238 of the Cayman Islands Companies Act, or otherwise, should obtain their own copy of the complete Cayman Islands Companies Act and seek legal advice from a law firm authorized to practice Cayman Islands law without delay.
Q:
What do I need to do now?
A:
We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the Merger affects you as a shareholder. After you have done so, please vote as soon as possible.
 
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Q:
Will any proxy solicitors be used in connection with the extraordinary general meeting?
A:
No.
Q:
Who can help answer my questions?
A:
If you have any questions about the Merger or if you need additional copies of this proxy statement or the accompanying proxy card, you should contact our Investor Relations Department at ir@genetronhealth.com.
In order for you to receive timely delivery of any additional copy of this proxy statement or the accompanying proxy card in advance of the extraordinary general meeting, you must make your request no later than ten days prior to the date of the extraordinary general meeting.
 
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SPECIAL FACTORS
Background of the Merger
Most of the events leading to the execution of the Merger Agreement described in this Background of the Merger occurred primarily in the PRC and Hong Kong. Therefore, all dates and times referenced in this Background of the Merger refer to China Standard Time. Per ADS consideration referenced in this Background of the Merger refer to the original prices that are not adjusted or take into account the ADS Ratio Change (as defined below), which is effective on October 26, 2023.
The Board and senior management of the Company have periodically reviewed the Company’s long-term strategic plans with the goal of maximizing shareholder value. As part of this ongoing process, the Board and senior management of the Company also have periodically reviewed strategic alternatives that may be available to the Company with the objective of increasing shareholder value, including potential commercial and strategic business partnerships, acquisition transactions, new business lines, and capital market events.
In August 2022, Mr. Wang engaged Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) to assist him in considering and evaluating possible strategic alternatives that may be available to the Company, including a “going-private transaction” involving the Company.
On August 21, 2022, the Company received from Mr. Wang a preliminary non-binding proposal letter (the “Proposal”) that proposed a “going-private” transaction to acquire all of the outstanding Shares of the Company, including Shares represented by ADSs, not already owned by him or his affiliates for US$0.272 per Share or US$1.36 per ADS in cash (the “Proposed Transaction”). The Proposal stated that the price set forth in the Proposal represented a premium of approximately 15% to the Company’s closing price on August 19, 2022 and a premium of approximately 21% to the Company’s average closing price during the 30 trading days preceding the Proposal. The Proposal also stated that Mr. Wang intended to fund the consideration payable in the Proposed Transaction with a combination of debt and equity capital contributions from Mr. Wang and third party sponsors.
On August 22, 2022, the Board held a telephonic meeting together with representatives of Davis Polk & Wardwell LLP (“Davis Polk”), U.S. legal counsel to the Company, and certain of the Company’s senior management members to discuss the Proposal. Representatives of Skadden were also invited to the meeting to assist Mr. Wang to answer questions from the Board regarding the Proposal. The Board discussed the formation of a special committee comprising solely of independent and disinterested directors (the “Special Committee”) to consider, review and evaluate the Proposal and resolved that two independent and disinterested directors, Mr. Wing Kee (Kelvin) Lau and Mr. Dian Kang, be appointed as members of the Special Committee. On the same day, the Company issued a press release announcing its receipt of the Proposal and the formation of the Special Committee to consider the Proposal.
In connection with establishing the Special Committee, the Board adopted resolutions granting to the Special Committee the power and authority to, among other things:(i) make such investigation of the Proposed Transaction and any matters relating thereto as the Special Committee, in its sole discretion, deems appropriate, (ii) evaluate the terms of the Proposed Transaction, (iii) discuss and negotiate the proposed terms of the Proposed Transaction, (iv) explore and pursue any alternatives to the Proposed Transaction as the Special Committee, in its sole discretion, deems appropriate, including maintaining the Company’s current status as a public company, a potential change of control transaction involving an alternative buyer, a strategic acquisition by the Company or any other alternative strategic transaction by the Company (any such alternative, an “Alternative Transaction”), and discuss and negotiate with any party to such Alternative Transaction and its representatives the proposed terms of such Alternative Transaction, (v) if and when appropriate as determined by the Special Committee in its sole discretion, negotiate definitive agreements with respect to the Proposed Transaction or any Alternative Transaction, (vi) report to the Board the recommendations and conclusions of the Special Committee with respect to the Proposed Transaction or any Alternative Transaction and any recommendation as to whether the final terms of the Proposed Transaction or any Alternative Transaction are fair to and in the best interests of the shareholders of the Company, including the unaffiliated shareholders, and should be approved or rejected by the Board and, if applicable, by the Company’s shareholders, and (vii) retain, in its sole discretion, and on terms and conditions acceptable to
 
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the Special Committee, such advisors, including legal counsel, financial advisors and other outside consultants, as the Special Committee in its sole discretion deems appropriate to assist the Special Committee in discharging its responsibilities.
Following its formation, the Special Committee interviewed law firms and financial advisory firms. After evaluating the candidates’ respective credentials, experience and independence to serve as legal and financial advisors, at the telephonic meeting held on August 27, 2022, the Special Committee determined to engage Davis Polk as its U.S. legal counsel and Kroll, LLC (operating through its Duff & Phelps Opinions Practice) (“Duff & Phelps”) as its independent financial advisor in connection with its review and evaluation of the Proposal. The Special Committee formally engaged Davis Polk and Duff & Phelps in such capacities on August 31, 2022 and September 2, 2022, respectively. The Company then issued a press release announcing the engagement of Davis Polk and Duff & Phelps by the Special Committee on September 2, 2022. Thereafter, the Special Committee also determined to obtain advice with respect to matters of Cayman Islands laws from Walkers (Hong Kong).
On August 30, 2022, the Special Committee held a telephonic meeting with representatives of Davis Polk to discuss certain preliminary matters regarding the Proposed Transaction. Among other things, the Special Committee approved a form of confidentiality agreement (the “Confidentiality Agreement”) to be entered into by Mr. Wang in furtherance of his and his financing sources’ due diligence review of the Company. Davis Polk sent the approved form of Confidentiality Agreement to Skadden on the same day.
Between August 30, 2022 and September 6, 2022, Davis Polk exchanged drafts of the Confidentiality Agreement with Skadden and discussed with the Special Committee the terms of the Confidentiality Agreement. On September 7, 2022, with the approval of the Special Committee, the Company entered into the Confidentiality Agreement with Mr. Wang. The Confidentiality Agreement contains customary provisions restricting Mr. Wang’s disclosure and use of any non-public information that may be received by him or his affiliates in connection with the Proposed Transaction and a 12-month “standstill” provision restricting Mr. Wang from acquiring additional securities of the Company without the Special Committee’s consent. The Confidentiality Agreement also provides that Mr. Wang is permitted to discuss the Proposed Transaction, and share related non-public information, with qualified equity financing sources approved by the Special Committee (each, a “Qualified Equity Financing Source”).
On September 5, 2022, an investment bank approached Davis Polk on behalf of its client, a genomic testing company based in United States (“Company A”), to express Company A’s interest in exploring a strategic collaboration with the Company. Company A did not indicate a concrete timetable or the nature of such collaboration, neither did Company A indicate whether the collaboration would be related to the potential going-private transaction of the Company.
On September 6, 2022, the Special Committee held a telephonic meeting with representatives of Davis Polk. After introducing the initial contact from Company A and Company A’s basic company information, representatives of Davis Polk discussed with the Special Committee at the meeting in respect of possible angles to assess the potential opportunity presented by Company A and proper routes for the Special Committee to react to it. After deliberation, the Special Committee instructed its advisors to further follow-up with Company A or its advisor to request additional details of the potential collaboration opportunity.
On September 7, 2022, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. During the course of the meeting, representatives of Davis Polk explained the Special Committee’s authority and fiduciary duties and provided an overview of the transaction process and the key issues in evaluating and negotiating the Proposed Transaction and possible Alternative Transactions. Representatives of Duff & Phelps then introduced to the Special Committee the process and indicative timeline for the Proposed Transaction, as well as Duff & Phelps’ financial due diligence and valuation analysis on the Company. The Special Committee instructed Duff & Phelps to assist the Company management in preparing the financial projections.
On October 26, 2022, Duff & Phelps sent the financial projections prepared by the Company management (the “October 2022 Projections”) to the Special Committee. The Special Committee then held a telephonic meeting with representatives of Davis Polk and Duff & Phelps on October 27, 2022 to discuss the October 2022 Projections. Representatives of Duff & Phelps walked through the key items and assumptions of such
 
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projections with the Special Committee and summarized the discussions between Duff & Phelps and the Company management and Duff & Phelps’ findings during the financial due diligence process. After discussion, the Special Committee instructed Duff & Phelps to have further discussions with the management of the Company and conduct additional analysis with respect to the October 2022 Projections. At the same meeting, representatives of Duff & Phelps also reported to the Special Committee that after further communications with Company A, Company A had clarified to Duff & Phelps that its intention was to collaborate with Mr. Wang in connection with the future operation of the Company giving consideration of the announced Proposed Transaction, and was therefore directed by Duff & Phelps to Mr. Wang. Thereafter, Mr. Wang discussed with Company A potential opportunities in future business collaborations between the Company and Company A, which discussion neither involved Company A’s participation in the Proposed Transaction nor resulted in any concrete collaboration plan.
On November 21, 2022, on behalf of Mr. Wang, Skadden provided Davis Polk with an initial draft of the Merger Agreement.
On December 2, 2022, the Special Committee held a telephonic meeting with representatives of Davis Polk and Duff & Phelps. At the meeting, representatives of Davis Polk reviewed with the Special Committee the key issues contained in the initial draft of the Merger Agreement, including, among other things: (a) the treatment of Company equity incentive awards, (b) the representations and warranties of the Company and Parent and Merger Sub, respectively, (c) the composition of the financing package proposed by Mr. Wang, including the potential use of available cash of the Company, (d) the interim covenants of the Company, (e) the “no-shop” covenant, including the absence of any “go-shop” right, (f) the restrictions on the ability of the Board to change its recommendation and/or terminate the Merger Agreement for fiduciary duty reasons in connection with a superior proposal and other circumstances, and the procedures in connection therewith, (g) the closing conditions, including the absence of the “majority-of-the-minority vote” requirement, a condition relating to the receipt of all requisite regulatory approvals and a condition relating to the maximum percentage of Shares for which holders could exercise dissenters’ rights, and (h) termination rights and termination fees of the Company and the Parent, respectively. The Special Committee then discussed proposed responses to the key issues in the Merger Agreement with Davis Polk and Duff & Phelps, in particular on whether to require a “go-shop” period and/or conduct a market check before entry into the Merger Agreement.
After discussions and taking into consideration that Mr. Wang had not formed his buyer consortium and the voting power represented by the Shares beneficially owned by Mr. Wang could not block an Alternative Transaction proposed by a third party, together with the fact that there had been a potential investor approaching the Special Committee, members of the Special Committee unanimously concluded that it would be in the best interests of the Company and its shareholders for the Company to proactively reach out to third parties to solicit potential interest in an Alternative Transaction, which might produce a competing offer on terms better than the Proposal. Accordingly, the Special Committee authorized Kroll Securities, LLC (“Kroll Securities”) to conduct a pre-signing market check process on behalf of the Company. In view of such pre-signing market check process, the Special Committee decided not to request a “go-shop” provision in the Merger Agreement. The Special Committee also instructed Davis Polk to revise the Merger Agreement by: (a) including a “majority of the minority vote” requirement as a closing condition; (b) deleting the closing condition relating to the Dissenting Shares; (c) deleting the requirement to hold a shareholders’ meeting for the evaluation and approval of the Proposed Transaction in the event the Board changes its recommendation for the Proposed Transaction (the “force-the-vote clause”); (d) adding the right of the Board to change the recommendation for the transaction to comply with its fiduciary duties in connection with certain events unrelated to superior proposals; (e) rejecting requirements of the payment of Company Termination Fees where, within a certain period of time following the termination of the Merger Agreement in certain circumstances, the Company enters into a competing transaction (such termination fees, the “tail period Company Termination Fee”); and (f) narrowing the scope of the representations and warranties to be provided by the Company, and the interim covenants of the Company, subject to further discussions with the management team of the Company.
On December 15, 2022, Davis Polk sent a revised draft of the Merger Agreement to Skadden, which reflected the instructions from the Special Committee and the feedback from the Company management with
 
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respect to the representations, warranties and interim operating covenants of the Company. Davis Polk and Skadden also discussed the positions and reasoning of certain major issues in the revised draft of the Merger Agreement.
Following the execution of the Confidentiality Agreement, Mr. Wang discussed with a selected group of shareholders of the Company, including CICC, with respect to their interest in providing equity funding to Parent as a member of the buyer consortium. In December 2022, at the request of CICC, Skadden reached out to Davis Polk for the Special Committee’s consent for CICC to participate in the Proposed Transaction as a Qualified Equity Financing Source, which consent was given on January 18, 2023 after CICC entered into a confidentiality agreement with the Company with terms substantially the same as those in the Confidentiality Agreement. Thereafter, representatives and advisors of CICC conducted due diligence investigation on the Company, the summarized findings of which were later shared with certain other Sponsors.
On January 4, 2023, Kroll Securities reported to the Special Committee the result of the pre-signing market check. During the market-check period commencing from December 20, 2022 and expiring on January 2, 2023, Kroll Securities initiated contact with 16 potential investors to gauge their interest in a potential transaction involving the Company and none of the investors indicated any preliminary interest in a transaction involving the Company.
On January 11, 2023, Skadden provided Davis Polk with a revised draft of the Merger Agreement. Among other things, the revised draft of the Merger Agreement rejected revisions made by Davis Polk on certain provisions, including: (a) deleting the “majority of the minority vote” requirement as a closing condition; (b) reinstating the force-the-vote clause; (c) reinstating the closing condition relating to the Dissenting Shares; and (d) reinstating the tail period Company Termination Fee trigger.
On February 10, 2023, the Special Committee held a telephonic meeting with representatives of Davis Polk. At the meeting, Davis Polk reviewed with the Special Committee certain key issues contained in the revised draft of the Merger Agreement sent by Skadden on January 11, 2023.
On February 20, 2023, Davis Polk provided Skadden with a revised draft of the Merger Agreement, reflecting the positions of the Special Committee, including, among other things, (a) reinstating the “majority of the minority vote” requirement as a closing condition; (b) rejecting the force-the-vote clause; (c) increasing the threshold in the closing condition relating to the Dissenting Shares from 10% to 20%; and (d) accepting the tail period Company Termination Fee trigger.
From January to March 2023, Mr. Wang discussed with Wuxi Capital, CCB and two other investment funds (“Investor A” and “Investor B”, respectively) on whether they would be interested in joining the buyer consortium. Following such discussions, each of those investment funds expressed interest in exploring such opportunities and requested Skadden to reach out to Davis Polk for the Special Committee’s consent for its participation in the buyer consortium as a Qualified Equity Financing Source.
On February 23, 2023, Wuxi Capital delivered to the Company a joinder to the Confidentiality Agreement and was approved to participate in the Proposed Transaction as a Qualified Equity Financing Source. Later in March 2023, both Investor A and Investor B were approved by the Special Committee to participate in the Proposed Transaction as a Qualified Equity Financing Source after their delivery of their respective joinders to the Confidentiality Agreement. Also in March 2023, another investor fund, an existing shareholder of the Company (“Investor C”, together with Investor A and Investor B, collectively, “Other Potential Investors”), delivered a joinder to the Confidentiality Agreement to the Company and was approved by the Special Committee to participate in the Proposed Transaction as a Qualified Equity Financing Source. On April 10, 2023, CCB delivered to the Company a joinder to the Confidentiality Agreement and was approved to participate in the Proposed Transaction as a Qualified Equity Financing Source.
Starting from March 2023 through August 2023, Mr. Wang, CICC, Wuxi Capital, CCB and Other Potential Investors (in each case after such Sponsor or Potential Investor was approved by the Special Committee) discussed the terms of the Proposed Transaction, especially the terms and conditions on which the members of the buyer consortium shall provide equity funding in connection with the Merger as well as the rights and obligations of those consortium members in carrying out the Proposed Transaction. Such terms were later reflected in the Equity Commitment Letters, the Limited Guarantees and the Interim Investor Agreement. During the same period, each of Wuxi Capital, CCB and Other Potential Investors conducted due
 
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diligence investigation with the Company. In July 2023, Investor C decided not to provide any new equity financing to Parent, but would remain as a Rollover Shareholder, and in early August 2023, both Investor A and Investor B decided not to pursue the Proposed Transaction.
During the same period, Mr. Wang discussed with certain shareholders of the Company, including, among others, Mr. Yan, CICC, WSG Entities and Management Holding Entities, on the potential rollover of certain Shares (including Shares represented by ADSs) owned by such shareholders in connection with, and voting of their Shares in favor of, the Proposed Transaction, and negotiated with those shareholders the terms and conditions in connection therewith. Such terms were later reflected in the Support Agreement.
On April 18, 2023, Skadden circulated to Davis Polk a revised draft of the Merger Agreement. Among other things, the revised draft of the Merger Agreement (a) proposed 1% and 2% of the cash consideration to be paid in the Proposed Transaction as the amounts of the Company Termination Fee and the Parent Termination Fee, respectively; (b) added the ODI Approval as a part of the requisite regulatory approvals to be obtained as a closing condition as requested by certain Sponsors whose funding needs to obtain such approval (such Sponsors, the “ODI Sponsors”); (c) reduced the threshold in the closing condition relating to the Dissenting Shares from 20% to 15%; and (d) confirmed that no debt financing would be involved in the Proposed Transaction.
On the same day, Skadden also provided Davis Polk with the initial draft forms of Equity Commitment Letter and Limited Guarantee to be executed and delivered by the Sponsors in connection with the Proposed Transaction, together with an initial draft Support Agreement to be executed and delivered by and among Parent and the Rollover Shareholders.
On April 19, 2023, Duff & Phelps provided the updated financials received from the Company management (the “April 2023 Projections”) to the Special Committee, along with a comparison against the October 2022 Projections.
On April 21, 2023, the Special Committee held a telephonic meeting with representatives of Duff & Phelps and Davis Polk. At the meeting, representatives of Duff & Phelps walked through the key items and assumptions of the April 2023 Projections (including differences from the October 2022 Projections). In particular, compared to the October 2022 Projections, representatives of Duff & Phelps noted two major updates: (i) the availability of the actual, instead of estimate, Company financials for the fiscal year ended December 31, 2022, and (ii) changed assumptions with respect to the Company’s COVID-19 testing services. Representatives of Duff & Phelps further noted that the Company had been continuously adjusting its development plans in light of market conditions and right-sizing its workforce to align with the Company’s business strategies. The Special Committee then instructed Duff & Phelps to proceed with the valuation analysis of the Company based on the April 2023 Projections.
At the same meeting, representatives of Davis Polk reviewed with the Special Committee the outstanding key issues contained in the revised draft of the Merger Agreement and updated the Special Committee on the latest status of the Buyer Group’s financing plan and package, among other things. After discussion with representatives of Davis Polk, the Special Committee decided to, among others, (a) propose 2% and 4% of the equity value of the Company implied in the Proposed Transaction as the amounts of the Company Termination Fee and the Parent Termination Fee, respectively; (b) narrow down the ODI Approval closing condition and also propose that the failure to satisfy which shall be a trigger of Parent Termination Fee payment (such Parent Termination Fee, the “ODI Termination Fee”); and (c) accept the percentage threshold of maximum Dissenting Shares being 15%. Representatives of Davis Polk also walked through the key issues of the draft of the Limited Guarantee, Equity Commitment Letter and Support Agreement with the Special Committee.
On April 26 and April 27, 2023, Davis Polk provided Skadden with the revised drafts of the Merger Agreement, forms of Equity Commitment Letter and Limited Guarantee, and Support Agreement, reflecting the Special Committee’s positions formulated in the April 21 meeting.
On May 25, 2023, Skadden provided Davis Polk with updated drafts of the Merger Agreement, the Equity Commitment Letter and the Limited Guarantee, and the Support Agreement. Among other things, the revised drafts (a) removed from the Merger Agreement the ODI Termination Fee trigger, and (b) proposed 1% and 2% of the equity value of the Company implied in the Proposed Transaction as the amounts of the
 
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Company Termination Fee and the Parent Termination Fee, respectively. Skadden also provided a draft of the Interim Investor Agreement to Davis Polk for the Special Committee’s reference on the same date.
Between May 25, 2023 and July 7, 2023, Davis Polk and Skadden exchanged drafts of the Merger Agreement and other ancillary documents and negotiated the remaining outstanding issues in these transaction documents. Among the key outstanding issues, the Company agreed to set the amounts of Company Termination Fee and Parent Termination Fee in the Merger Agreement at 1% and 2%, respectively, of the equity value of the Company implied in the Proposed Transaction, on the condition that the ODI Termination Fee mechanism is accepted. Upon objections by the Buyer Group, the Company then offered compromised positions such as reducing the ODI Termination Fee to 50% of the regular Parent Termination Fee and precondition the ODI Parent Termination Fee on the Company not breaching in any material respect the covenants related to the ODI Approval. The Company also proposed to build in a mechanism to allow for extending the Long Stop Date in the case that ODI Approval has not been obtained by the Long Stop Date.
In July 2023, Mr. Wang reached out to representatives of Wealth Strategy and Wuxi Huishan Capital to discuss the interest of such entities to provide equity financing to the buyer consortium and participate in the Proposed Transaction. On July 19 and July 20, 2023, each of Wealth Strategy Holding and Wuxi Huishan Capital was approved by the Special Committee, respectively, to participate in the Proposed Transaction as a Qualified Equity Financing Source after its delivery of a joinder to the Confidentiality Agreement, following which Wealth Strategy and Wuxi Huishan Capital participated in the discussion on the terms of the Proposed Transaction.
On July 28, 2023, Skadden sent to Davis Polk a revised draft of the Limited Guarantee tailored for the ODI Sponsors, in which the ODI Sponsors proposed to pay their guaranteed amount thereunder to a PRC subsidiary of the Company in an RMB equivalent amount calculated at a prescribed exchange rate instead of paying the USD amount to the Company.
On July 30, 2023, Duff & Phelps sent to the Special Committee the latest financials provided by the Company management (the “July 2023 Projections”) together with a summary showing the updates.
On August 1, 2023, Skadden sent to Davis Polk the revised draft of the Merger Agreement, which rejected the Special Committee’s proposals in relation to the ODI Termination Fee and reiterated the Buyer Group’s position to remove the “majority of the minority vote” voting requirement, among other things.
On August 2, 2023, the Special Committee held a telephonic meeting with representatives of Duff & Phelps and Davis Polk. At the meeting, representatives of Duff & Phelps went through with the Special Committee the July 2023 Projections’ key forecast changes from the April 2023 Projections and summarized the discussions between Duff & Phelps and Company management related thereto. Duff & Phelps also updated the Special Committee that the Buyer Group had not indicated any intention to adjust its offer price for the potential transaction despite the decrease in the financial projections. After discussion, the Special Committee authorized Duff & Phelps to use the July 2023 Projections for purposes of Duff & Phelps’ financial analysis. See “Special Factors — Certain Financial Projections” beginning on page 35 for a summary of these financial projections.
Between August 4, 2023 and August 8, 2023, Davis Polk engaged in discussions with the Special Committee to revisit the outstanding issues in the Merger Agreement and the other ancillary documents. Upon further discussions with representatives of Davis Polk, the Special Committee decided to (a) agree to the removal of the “majority of the minority vote” voting requirement, considering the rarity of a “majority of the minority vote” requirement in this type of transaction and the uncertainty this requirement may add to the consummation of the Proposed Transaction; and (b) accept the construct of the payment of a portion of the Parent Termination Fee to a PRC subsidiary of the Company in RMB. After further discussion with Davis Polk and the Company management, the Special Committee also agreed to drop the request for the ODI Termination Fee, considering (i) it is in the Company’s best interest to speed up the transaction process; (ii) the risk of the Proposed Transaction being terminated due to the failure of obtaining the ODI Approval is relatively acceptable given the equity commitments from the ODI Sponsors are less than 50% of the total commitments; (iii) obtaining the ODI Approval is reasonably practical based on the details of the anticipated ODI procedure provided by the Buyer Group; and (iv) the Buyer Group did not have much flexibility on this point given the internal policy of the ODI Sponsors.
 
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On August 8, 2023, Davis Polk circulated to Skadden revised drafts of the Merger Agreement and the form Limited Guarantee for the ODI Sponsors reflecting the Special Committee’s positions on the outstanding issues, and communicated to Skadden the Company’s preference to speed up the transaction process, as a condition of dropping the ODI termination fee.
Between August 19, 2023 and August 22, 2023, Davis Polk and Skadden exchanged drafts of the Merger Agreement and the disclosure schedules in relation to the Merger Agreement. On August 19, 2023, Skadden provided Davis Polk and the Special Committee with the Buyer Group’s finalized financing package details including the exact amounts of equity commitments and rollover arrangements. During this period, the Company also worked with Davis Polk to finalize the outstanding details and numbers in the transaction documents relating to the Company’s employee incentive awards and their rollover arrangement. On August 26, 2023, at the direction of the Special Committee and the Buyer Group, respectively, Davis Polk and Skadden finalized the Merger Agreement and the other transaction documents, which were then shared with each of the Sponsors for its final review and internal approval process.
On September 18, 2023, a subsidiary of the Company, Beijing Genetron Biotechnology Co., Ltd., completed a convertible loan financing transaction and received the loan proceeds of RMB100,000,000 in full from Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership), an investment fund affiliated to Mr. Kung. The Company planned to use the net proceeds from the loan for working capital and general corporate purposes.
Each of the Sponsors completed its final review and obtained its internal approval for the execution of the definitive transaction documents at the end of September 2023.
On October 11, 2023, the Special Committee held a telephonic meeting in the morning, together with representatives of Duff & Phelps and Davis Polk. At the invitation of the Special Committee, Davis Polk discussed the Special Committee’s fiduciary duties with respect to the review and evaluation of the Proposed Transaction. Davis Polk then provided an overview of the status of the negotiations of the Proposed Transaction and went on to describe the key terms of the Merger Agreement and the other transaction documents, including (i) the Merger consideration, (ii) the Buyer Group’s financing arrangements, (iii) the treatment of the employee incentive awards, (iv) the shareholder approval requirement, (v) the closing conditions under the Merger Agreement and the closing mechanics contemplated thereby, and (vi) the circumstances under which the parties would have the right to terminate the Merger Agreement and the associated termination fees payable upon termination. Thereafter, at the invitation of the Special Committee, Duff & Phelps made a presentation on its valuation analyses of the Company and the Merger consideration proposed by the Buyer Group, including a discussion of the valuation methodologies employed by Duff & Phelps in its analysis, responded to questions from the Special Committee, and orally delivered its opinion that, as of the date thereof and subject to the limitations and assumptions set forth in its written opinion, the Merger consideration of (i) US$0.272 per Share to be paid to the holders of the Shares of the Company (other than the Excluded Shares, the Dissenting Shares and Shares represented by ADSs) and (ii) US$1.36 per ADS to be paid to the holders of ADSs (other than ADSs representing the Excluded Shares) pursuant to the Merger Agreement is fair, from a financial point of view, to such holders. Duff & Phelps indicated that following the meeting, Duff & Phelps would deliver to the Special Committee a letter executed by Duff & Phelps confirming this opinion. After considering the proposed terms of the Merger Agreement and the other transaction agreements and the various presentations of Davis Polk and Duff & Phelps, including receipt of Duff & Phelps’ oral opinion, and taking into account the other factors described below under the section entitled “— Reasons for the Merger and Recommendation of the Special Committee and the Board,” the Special Committee then unanimously (1) determined that the execution of the Merger Agreement and the Plan of Merger and consummation of Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Company’s shareholders (other than the holders of Excluded Shares) and (2) recommended that the Board (A) determine that the execution of the Merger Agreement and the Plan of Merger, and consummation of the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Company’s shareholders (other than the holders of Excluded Shares), and declare that it is advisable for the Company to enter into the Merger Agreement and the Plan of Merger, and consummate the Transactions, (B) authorize and approve the execution, delivery and performance of the Merger Agreement, the Plan of Merger and the consummation of Transactions, including the Merger, and (C) resolve to recommend the authorization and approval of the Merger Agreement, the Plan of Merger, and
 
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the consummation of the Transactions, including the Merger, by the Company’s shareholders at a meeting of the shareholders of the Company and direct that the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, be submitted to a vote of the Company’s shareholders for authorization and approval.
Following the meeting of the Special Committee, the Board held a meeting in the morning of October 11, 2023, together with representatives of Davis Polk. Davis Polk discussed the fiduciary duties of directors with respect to the review and evaluation of the Proposed Transaction and went on to describe the key terms of the Merger Agreement and the other transaction documents. The Special Committee then presented its recommendation, described above, to the Board. After considering the proposed terms of the Merger Agreement and the other transaction agreements, the presentation of Davis Polk, Duff & Phelps’ opinion provided to the Special Committee as to the fairness, from a financial point of view, of the Merger consideration to be received by the holders of Shares and ADSs (other than the holders of Excluded Shares), that the Merger is fair to such holders, and taking into account the other factors described below under the section entitled “— Reasons for the Merger and Recommendation of the Special Committee and the Board,” the Board then unanimously: (i) determined that the execution of the Merger Agreement and the Plan of Merger and consummation of the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Company’s shareholders (other than the holders of Excluded Shares), and declared that it is advisable for the Company to enter into the Merger Agreement and the Plan of Merger and consummate the Transactions; (ii) authorized and approved the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions, including the Merger; and (iii) resolved to direct that the authorization and approval of the execution, delivery and performance of the Merger Agreement, the Plan of Merger, and the consummation of the Transactions be submitted to a vote at an extraordinary general meeting of the shareholders with the recommendation of the Board that the shareholders of the Company authorizing and approving the execution, delivery and performance of the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including the Merger. The Board also unanimously approved at the meeting the change in the ratio of ADS to Shares from one ADS representing five Shares to one ADS representing 15 Shares (such change, the “ADS Ratio Change”) as part of the efforts of the Company to regain compliance with the minimum bid price requirement under the NASDAQ Listing Rule 5450(a)(1).
After the Board meeting, on October 11, 2023, the Company, Parent and Merger Sub executed the Merger Agreement. Other transaction documents, including the Support Agreement, the Interim Investors Agreement, the Equity Commitment Letters, and the Limited Guarantees were executed at the same time.
Thereafter on October 11, 2023, the Company issued press releases announcing the execution of the Merger Agreement and the ADS Ratio Change.
Reasons for the Merger and Recommendation of the Special Committee and the Board
At a meeting on October 11, 2023, the Special Committee, in consultation with Davis Polk and Duff & Phelps, and after considering and weighing various factors, and evaluating the proposed terms of the Merger and the related transactions, unanimously determined that the Merger Agreement, the Plan of Merger, and the Merger are fair to and in the best interests of the Company and the Unaffiliated Security Holders, and unanimously recommended that the Board (a) determine that the execution of the Merger Agreement and the Plan of Merger, and consummation of the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Unaffiliated Security Holders, and declare that it is advisable for the Company to enter into the Merger Agreement and the Plan of Merger, and consummate the Transactions, (b) authorize and approve the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of Transactions, including the Merger, and (c) resolve to recommend the authorization and approval of the Merger Agreement, the Plan of Merger, and the consummation of the Transactions, including the Merger, by the Company’s shareholders at a meeting of the shareholders of the Company and direct that the Merger Agreement, the Plan of Merger and the consummation of the Transactions, including the Merger, be submitted to a vote of the Company’s shareholders for authorization and approval.
At a meeting later on the same day, the Board, acting on the unanimous recommendation of the Special Committee, and after each director duly disclosed his or her interests in the transactions contemplated by the
 
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Merger Agreement, including the Merger, as required by the memorandum and articles of association of the Company as amended to date and the Cayman Islands Companies Act, by way of unanimous resolutions, among other resolutions, (a) determined that the execution of the Merger Agreement and the Plan of Merger and consummation of the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Unaffiliated Security Holders, and declared that it is advisable for the Company to enter into the Merger Agreement and the Plan of Merger and consummate the Transactions, (b) authorized and approved the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions, including the Merger, and (c) resolved to direct that the authorization and approval of the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions be submitted to a vote at an extraordinary general meeting of the shareholders with the recommendation of the Board that the shareholders of the Company authorizing and approving the execution, delivery and performance of the Merger Agreement and the Plan of Merger, and the consummation of the Transactions, including the Merger.
In reaching their determination, the Special Committee and the Board considered the factors and potential benefits of the Merger discussed below, each of which the Special Committee and the Board believe supported their decision to approve the Merger Agreement and their determination that the Merger is fair to the Unaffiliated Security Holders. These factors and potential benefits are not listed in any relative order of importance.
Premium Over Market Price of the ADSs.   The Per ADS Merger Consideration of US$4.08 represents (i) a premium of approximately 15% to the closing trading price of the ADSs on August 19, 2022, the last trading day prior to the Company’s announcement of its receipt of the Proposal, (ii) a premium of approximately 21% to the average closing price of the ADSs during the last 30 trading days prior to the Company’s receipt of the Proposal, and (iii) a premium of approximately 42% to the closing price of the ADSs on October 10, 2023, the last trading day prior to the date on which Company entered into the Merger Agreement.
All-Cash Merger Consideration.   The fact that the Merger consideration will be all cash, which will provide immediate liquidity to the Unaffiliated Security Holders and allow them to avoid post-Merger risks and uncertainties relating to the prospects of the Company.
Opinion of Financial Advisor.   The Special Committee considered the financial analysis conducted and discussed with the Special Committee by representatives of Duff & Phelps, as well as the oral and written opinion of Duff & Phelps rendered to the Special Committee on October 11, 2023, that as of that date, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Duff & Phelps in preparing its opinion, the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received by the holders of Shares and ADSs (other than the holders of Excluded Shares, the Dissenting Shares and ADSs representing Excluded Shares) in the Merger were fair, from a financial point of view, to such holders (see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 37 for additional information).
Shareholder Approval Requirement.   The Merger must be authorized and approved by a special resolution of the Company passed at the extraordinary general meeting.
Potential Adverse U.S. Regulatory Changes.   The possibility that PRC-based U.S.-listed public companies could be subject to additional costs and burden of regulatory compliance by reason of the enactment in the U.S. of the Holding Foreign Companies Accountable Act as well as any other similar newly enacted law or regulation (including rules of the SEC implementing such laws).
Tightening Regulatory Environment in the PRC.   The deterioration of macroeconomic and general market conditions, and tightening of regulatory policies across industries in the PRC, in particular in the industry that the Company operates in, which is expected to have a meaningful impact on business demand and the general market environment.
Geopolitical Uncertainty.   Rising political tensions between China and the U.S. and the uncertainty of future trade policies, treaties, government regulations, tariffs and other matters.
 
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Elimination of Unaffiliated Security Holders’ Exposure to Future Performance Risks of the Company.   The Merger would shift the risk of the future financial performance of the Company from the Unaffiliated Security Holders, who do not have the power to control decisions made regarding the Company’s business, entirely to the Buyer Group and Other Rollover Shareholders, who would have the power to control the Company’s business.
No Third-Party Offers.   There has been no offer, other than the Proposal, within the past two years of which the Company, the Special Committee, or the Board is aware for a going-private or other similar transaction with respect to the Company.
Unanimous Recommendation of the Special Committee.   The Board considered that the Special Committee, after evaluating the Transactions, unanimously determined that the Merger Agreement, the Plan of Merger, and the Merger are fair to, advisable, and in the best interests of the Company and Unaffiliated Security Holders and recommended that the Board authorize and approve the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger.
Right to Terminate for Superior Proposal or Intervening Event.   The Company, with the approval of the Special Committee and the Board, will have the right to terminate the Merger Agreement and/or change the Board’s recommendation that the Company’s shareholders approve the Merger at the extraordinary general meeting, in the event the Company receives a Superior Proposal or there is an Intervening Event.
Dissenters’ Rights.   Shareholders who follow the statutory procedures for exercising dissenters’ rights set forth in Section 238 of the Cayman Islands Companies Act will be entitled to seek an appraisal of the value of their Shares by a Cayman Islands court.
Financing Commitments.   The fact that the Buyer Group has delivered Equity Commitment Letters committing sufficient equity financing to complete the Merger.
Likelihood of Closing.   The likelihood and anticipated timing of completing the Merger in light of the scope of the conditions to completion.
Specific Performance.   The Company’s ability, as set out in the Merger Agreement and the ancillary documents (as applicable), to seek specific performance to prevent breaches of such agreements and to enforce specifically the terms of such agreements.
Compliance Costs.   The costs of regulatory compliance for public companies, including accounting, legal and other expenses incurred in connection with the public reporting requirements under the U.S. federal securities laws, and the significant amount of time and resources that the Company’s management and accounting staff must devote to SEC reporting and compliance matters.
Disclosure Risks.   The recognition that, as an SEC-reporting company, the Company is required to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company, and which potentially may help its actual or potential competitors compete against the Company or make it more difficult for the Company to negotiate favorable terms with actual or potential customers, clients or suppliers, as the case may be.
In the course of reaching its conclusion regarding the fairness of the Merger to the Unaffiliated Security Holders and its decision to recommend the authorization and approval of the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger, the Special Committee considered the opinion and related financial analyses presented by Duff & Phelps, among other factors. These analyses included a financial analysis, as well as the trading history of the ADSs, as indications of the going concern value of the Company, and concluded that the Per ADS Merger Consideration represented a significant premium over the going concern value indicated by such analyses and trading history. The material analyses as presented to the Special Committee by Duff & Phelps on October 11, 2023 are summarized below under the caption “Opinion of the Special Committee’s Financial Advisor” beginning on page 37. The Special Committee expressly approved of these analyses and the opinion of Duff & Phelps, among other factors considered, in reaching its determination as to the fairness of the Transactions, including the Merger.
 
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The Special Committee and the Board did not consider the Company’s net book value, which is an accounting concept based on historical costs, as a factor because they believed that net book value is not a material indicator of the Company’s value as a going concern, but rather is indicative of historical costs (and does not, for example, take into account the future prospects of the Company, market trends and conditions, or business risks inherent in a competitive market) and therefore, in their view, is not a relevant measure in the determination as to the fairness of the Merger.
In their consideration of the fairness of the proposed Merger, the Special Committee did not undertake an appraisal of the assets of the Company to determine the Company’s liquidation value for the Unaffiliated Security Holders, due to the impracticability of determining a liquidation value given the significant execution risk involved in any breakup. In addition, the Special Committee did not consider the Company’s liquidation value to be a relevant valuation method because it considers the Company to be a viable going concern where value is derived from cash flows generated from its continuing operations, and because the Company will continue to operate its business following the Merger.
The foregoing discussion of the information and factors considered and given weight by the Special Committee and the Board in connection with their evaluation of the fairness of the Merger to the Unaffiliated Security Holders is not intended to be exhaustive, but includes all material factors considered. The Special Committee and the Board found it impracticable to assign, and did not assign, relative weights to the foregoing factors considered by the Special Committee and the Board in reaching their conclusions as to the fairness of the Merger to the Unaffiliated Security Holders. Rather, the Special Committee and the Board made the fairness determinations after considering all of the foregoing factors as a whole.
In addition to the foregoing factors and analyses that supported the conclusion of the Special Committee and the Board that the Merger is fair to the Unaffiliated Security Holders, the Special Committee and the Board also weighed the following negative factors:

No Future Participation in the Prospects of the Company.   Following the consummation of the Merger, the Unaffiliated Security Holders will cease to participate in any future earnings of or benefit from any increases in the value of the Company, if any.

No Separate Vote on the Merger by the Unaffiliated Security Holders.   The fact that the consummation of the Merger is not subject to any separate approval by the Unaffiliated Security Holders.

Potential Tax Liability of Unaffiliated Security Holders.   The fact that the Merger will be a taxable transaction to Unaffiliated Security Holders who are U.S. taxpayers or are taxpayers in other jurisdictions, notwithstanding that the Unaffiliated Security Holders will not be able to choose whether or not to participate in the Merger.

Interim Restrictions.   The restrictions on the conduct of the Company’s business prior to the completion of the Merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending the completion of the Merger.

Breakup Fees and Limitation of Parent Liability.   The fact that the Company may be required, under certain circumstances, to pay Parent a termination fee of US$1,250,000 in connection with a termination of the Merger Agreement and the fact that the Company’s right to recover damages from Parent for a breach of the Merger Agreement will be limited, in most circumstances, to payment by Parent of a termination fee of US$2,500,000.

Limit on Dissenting Shares.   The fact that the Buyer will be entitled to not consummate the Merger if the holders of 15% or more of the outstanding Shares exercise dissenters’ rights.
After weighing these negative factors and giving them due consideration, the Special Committee and the Board concluded that none of these factors, alone or in the aggregate, is significant enough to outweigh the factors and analyses that it considered to support its belief that the Merger is fair to the Unaffiliated Security Holders.
In addition, the Special Committee and the Board believe that sufficient procedural safeguards are present to ensure that the Merger is procedurally fair to the Unaffiliated Security Holders and to permit the Special
 
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Committee to represent effectively the interests of such Unaffiliated Security Holders. Such procedural safeguards include the following, which are not listed in any relative order of importance:

both of the members of the Special Committee during the entire process were and are disinterested and independent directors free from any affiliation with the Buyer Group; neither of the members of the Special Committee is or ever was an employee of the Company or any of its subsidiaries; and neither of such members has any financial interest in the Merger that is different from that of the Unaffiliated Security Holders, other than the members’ receipt of compensation in the ordinary course as members of the Board, their non-contingent compensation as members of the Special Committee, their indemnification and liability insurance rights under the Merger Agreement, and their rights to receive cash consideration after the completion of the Merger with respect to the Company Options and/or Company Restricted Shares that had been granted to them under the Company Share Plans;

the consideration and negotiation of the Merger Agreement were conducted entirely under the control and supervision of the Special Committee, and that no limitations were placed on the Special Committee’s authority;

in considering the Proposed Transaction, the Special Committee acted solely to represent the interests of the Unaffiliated Security Holders, and the Special Committee had full control of the extensive negotiations with the Buyer Group and its advisors on behalf of the Unaffiliated Security Holders;

the Special Committee was assisted by its financial and legal advisors in the negotiation with the Buyer Group and the evaluation of the Merger;

the Special Committee was delegated by the Board the full and exclusive authority to evaluate the terms of the Proposed Transaction, to negotiate the terms of the Merger Agreement and the Merger, to consider alternative transactions, to determine whether to reject the Proposed Transaction, and to determine whether the Merger would be fair to, and in the best interests of, the Unaffiliated Security Holders and whether to recommend to the Board that it approve the Company’s entering into definitive agreements based on the Proposed Transaction;

the terms and conditions of the Merger Agreement were the product of extensive negotiations between the Special Committee and its advisors, on the one hand, and the Buyer Group and its advisors, on the other hand;

the Special Committee held telephonic meetings on multiple occasions to consider and review the terms of the Merger Agreement and the Merger;

the Special Committee has the right pursuant to the Merger Agreement to evaluate on behalf of the Company unsolicited alternative acquisition proposals from third parties that might arise between the date of the Merger Agreement and the Effective Time, to furnish confidential information to and conduct negotiations with such third parties and, in certain circumstances, to terminate the Merger Agreement subject to the payment to Parent of a termination fee, and to recommend that the Board accept an alternative acquisition proposal, consistent with the Board’s fiduciary obligations; and

the Special Committee had no obligation to recommend the authorization and approval of the Merger or any other transaction.
In the course of determining whether such procedural safeguards were sufficient to ensure that the Merger is procedurally fair to the Unaffiliated Security Holders, the Special Committee considered the negative factor that the consummation of the Merger is not subject to any additional vote by the Unaffiliated Security Holders and determined that such negative factor is outweighed by, in addition to the various factors listed above tending to support the Special Committee’s approval of the Merger, (i) the fact that the Cayman Islands Companies Act does not generally require or contemplate the approval of a merger by a majority of the Unaffiliated Security Holders; and (ii) the fact that the voluntary imposition of a requirement for any additional vote by the Unaffiliated Security Holders in connection with a proposed merger is relatively rare for Cayman Islands companies.
In reaching its determination that the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger, are fair (both substantially and procedurally) to and in the best interests of the Company and its Unaffiliated Security Holders and its decision to authorize and approve the Merger Agreement and
 
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recommend the authorization and approval of the Merger Agreement, the Plan of Merger, and Transactions, including the Merger, by the Company’s shareholders, the Board, on behalf of the Company, considered the analyses and recommendation of the Special Committee and adopted such recommendations and analyses.
Certain directors and executive officers of the Company have interests in the Merger that are different from, and/or in addition to, those of the Unaffiliated Security Holders by virtue of their continuing interests in the Surviving Company after the consummation of the Merger. These interests are described under the caption “Summary Term Sheet — Interests of the Company’s Directors and Executive Officers.”
Position of Participants as to the Fairness of the Merger
Under SEC rules governing going-private transactions, each Participant is required to express his, her or its belief as to the fairness of the Merger to the Unaffiliated Security Holders.
Each Participant is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Participants as to the fairness of the Merger are not intended to be and should not be construed as a recommendation to any shareholder as to how that shareholder should vote on the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the consummation of the Transactions. The Participants have interests in the Merger that are different from, and/or in addition to, those of the other shareholders of the Company by virtue of their continuing interests in the Surviving Company after the completion of the Merger. These interests are described under the section entitled “Special Factors — Interests of Certain Persons in the Merger — Interests of the Participants” beginning on page 53.
The Participants believe that the interests of the Unaffiliated Security Holders were represented by the Special Committee, which negotiated the terms and conditions of the Merger Agreement with the assistance of its legal counsel and independent financial advisor. The Buyer Group attempted to negotiate a transaction that would be most favorable to the Buyer Group, rather than to the Unaffiliated Security Holders and, accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were substantively and procedurally fair to such holders. The Participants did not participate in the deliberations of the Special Committee regarding, and did not receive any advice from the Special Committee’s legal counsel or independent financial advisor as to, the fairness of the Merger to the Unaffiliated Security Holders. Furthermore, the Participant did not undertake a formal evaluation of the fairness of the Merger. No financial advisor provided the Participants with any analysis or opinion with respect to the fairness of the Per Share Merger Consideration or the Per ADS Merger Consideration to the Unaffiliated Security Holders.
Based on their knowledge and analysis of available information regarding the Company, as well as the factors considered by, and findings of, the Special Committee and the Board discussed under the section entitled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 27, the Participants believe that the Merger is substantively fair to the Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

the Per ADS Merger Consideration of US$4.08 offered to the Unaffiliated Security Holders represents (i) a premium of approximately 15% to the closing price of the ADSs on August 19, 2022, the last trading day prior to the Company’s announcement of its receipt of the Proposal, (ii) a premium of approximately 21% to the average closing price of the ADSs during the last 30 trading days prior to the Company’s receipt of the Proposal, and (iii) a premium of approximately 42% to the closing price of the ADSs on October 10, 2023, the last trading day prior to the date on which Company entered into the Merger Agreement;

the historical closing price of the ADSs was traded as low as US$2.73 per ADS during the 52-week period prior to August 22, 2022, the date on which the Company announced its receipt of the Proposal;

notwithstanding that the Participants may not rely upon the opinion provided by Duff & Phelps to the Special Committee, the Special Committee received an opinion from Duff & Phelps stating that, as of the date of such opinion, and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff & Phelps in preparing its opinion, the Per Share Merger Consideration and the Per ADS Merger Consideration to be received by the holders of Shares and ADSs (other than the holders of Excluded Shares, the
 
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Dissenting Shares and ADSs representing the Excluded Shares) in the Merger were fair, from a financial point of view, to such holders;

the Special Committee and, upon the unanimous recommendation of the Special Committee, the Board determined that the Merger Agreement, the Plan of Merger and the consummation of the Transactions are fair to and in the best interests of the Unaffiliated Security Holders;

the Company has the ability, under certain circumstances, to seek specific performance to prevent breaches of the Merger Agreement and the Equity Commitment Letters to enforce specifically the terms of such agreements;

the Merger is not conditioned on any financing being obtained by Parent or Merger Sub, thus increasing the likelihood that the Merger will be consummated and the Merger consideration will be paid to the Unaffiliated Security Holders;

the consideration to be paid to the Unaffiliated Security Holders in the Merger is all cash, allowing the Unaffiliated Security Holders to immediately realize a certain and fair value for all of their Shares and/or ADSs, without incurring brokerage and other costs typically associated with market sales (other than, in the case of holders of ADSs, and a US$0.05 per ADS cancellation fee pursuant to the terms of the Deposit Agreement);

the fact that the Buyer Group informed the Special Committee of the extent to which the interests of the Buyer Group, the Other Rollover Shareholders and the directors and executive officers of the Company in the Merger differ from those of the Unaffiliated Security Holders;

since the Company’s receipt of the Proposal on August 21, 2022 and prior to the execution of the Merger Agreement, no third party had submitted a competing proposal;

the potential adverse effects on the Company’s business, financial condition and results of operations caused by the general economic slowdown in the PRC and globally and the expected sustained challenges in the macroeconomic environment, including the growing geopolitical tensions between the U.S. and China;

the significant volatility in the global financial markets recently, including tightening of liquidity in credit markets;

the tightening of regulatory policies across industries in the PRC, in particular in the industry that the Company operates in, which is expected to have a meaningful impact on the market environment; and

the availability of dissenters’ rights to the Unaffiliated Security Holders who hold their Shares in their own names and comply with all of the required procedures under the Cayman Islands Companies Act for exercising dissenters’ rights, which allow registered shareholders to receive payment of the fair value of their Shares as determined by the Grand Court of the Cayman Islands.
The Participants did not consider the liquidation value of the Company because the Participants considered the Company to be a viable going concern and viewed the trading history of the ADSs as an indication of the Company’s going concern value, and, accordingly, did not believe liquidation value to be relevant to a determination as to the fairness of the Merger.
The Participants did not consider the Company’s net book value, which is an accounting concept, as a factor because they believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and therefore not a relevant measure in the determination as to the fairness of the Merger. The Participants note, however, that the Per ADS Merger Consideration of US$4.08 and the Per Share Merger Consideration of US$0.272 are significantly higher than the net book value per Share as of December 31, 2022, which is US$0.174. See “Financial Information — Net Book Value per Company Share” beginning on page 94 for a discussion on the Company’s net book value per Share.
The Participants did not establish, and did not consider, a going concern value for the Company as a public company to determine the fairness of the Merger consideration to the Unaffiliated Security Holders because, following the Merger, the Company will have a significantly different capital structure. However, to
 
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the extent the pre-Merger going concern value was reflected in the pre-announcement price of the ADSs, the Per ADS Merger Consideration of US$4.08 represents a premium to the going concern value of the Company.
The Participants are not aware of, and thus did not consider, any offers or proposals made by any unaffiliated person during the past two years for (i) a merger or consolidation of the Company with or into another company, (ii) a sale or transfer of all or substantially all of the Company’s assets or (iii) the purchase of all or a substantial portion of the Company’s voting securities that would enable such person to exercise control of or significant influence over the Company.
The Participants did not perform or receive any independent reports, opinions or appraisals from any third party related to the Merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the Merger to the Unaffiliated Security Holders.
The Participants believe that the Merger is procedurally fair to the Unaffiliated Security Holders based on the following factors, which are not listed in any relative order of importance:

the consideration and negotiation of the Merger Agreement were conducted entirely under the control and supervision of the Special Committee, which consists of two independent directors, as defined under applicable rules of NASDAQ, each of whom is an outside, non-employee director, and that no limitations were placed on the Special Committee’s authority;

in considering the transaction with the Buyer Group, the Special Committee acted solely to represent the interests of the Unaffiliated Security Holders, and the Special Committee had full control of the extensive negotiations with the members of the Buyer Group and their respective advisors on behalf of the Unaffiliated Security Holders;

both members of the Special Committee during the entire process were and are independent directors and free from any affiliation with any member of the Buyer Group; in addition, neither member of the Special Committee is or ever was an employee of the Company or any of its subsidiaries or affiliates and neither member has any financial interest in the Merger that is different from that of the Unaffiliated Security Holders other than (i) the members’ receipt of the Board compensation in the ordinary course as members of the Board, (ii) Special Committee members’ compensation in connection with the Special Committee’s evaluation of the Proposal and evaluation and negotiation of the terms and conditions of the Merger Agreement, the Plan of Merger, and the Transactions, including the Merger (which is not contingent on the completion of the Merger or the Special Committee’s or the Board’s recommendation and/or authorization and approval of the Merger), (iii) their rights as members of the Board, including as members of the Special Committee, to the directors’ indemnification and liability insurance rights under the Merger Agreement, and (iv) their right to receive cash consideration after the completion of the Merger with respect to the Company Options and/or Company Restricted Shares that had been granted to them under the Company Share Plans;

the Special Committee retained and was advised by an independent financial advisor and legal counsel each of whom is experienced in advising committees such as the Special Committee in similar transactions;

the Special Committee was empowered to consider, attend to and take any and all actions in connection with the Proposal and in connection with the Transactions from the date the Special Committee was established, and no evaluation, negotiation or response regarding the Transactions in connection therewith from that date forward was considered by the Board for approval unless the Special Committee had recommended such action to the Board;

the Special Committee held meetings regularly to consider and review the terms of the Merger Agreement, the Plan of Merger and the Transactions;

the recognition by each of the Special Committee and the Board that it had no obligation to recommend the Transactions;

the Buyer Group did not participate in or have any influence over the deliberative process of, or the conclusions reached by, the Special Committee or the negotiating positions of the Special Committee;

the Company’s ability, subject to compliance with the terms and conditions of the Merger Agreement, to terminate the Merger Agreement prior to the receipt of shareholder approval (a) in order to accept
 
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an alternative transaction proposed by a third party that is a Superior Proposal or (b) in the event that the Board changes its recommendation of the Merger as required by directors’ fiduciary duties in connection with an Intervening Event; and

the fact that, in certain circumstances under the terms of the Merger Agreement, the Special Committee and the Board are able to change, withhold, withdraw, qualify or modify their recommendation of the Merger.
The foregoing is a summary of the information and factors considered and given weight by the Participants in connection with their evaluation of the fairness of the Merger to the Unaffiliated Security Holders, which is not intended to be exhaustive, but is believed by the Participants to include all material factors considered by them. The Participants did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching their conclusion as to the fairness of the Merger to the Unaffiliated Security Holders. Rather, their fairness determination was made after consideration of all of the foregoing factors as a whole.
The Participants believe these factors provide a reasonable basis for their belief that the Merger is both substantively and procedurally fair to the Unaffiliated Security Holders. This belief, however, is not intended to be and should not be construed as a recommendation by the Participants to any Unaffiliated Security Holder of the Company as to how such Unaffiliated Security Holder should vote with respect to the authorization and approval of the Merger Agreement, the Plan of Merger and the consummation of the Transactions.
Certain Financial Projections
The Company’s management does not, as a matter of course, make available to the public detailed financial forecasts or internal projections as to future performance, revenues, earnings or financial condition. However, the Company’s management prepared certain financial projections for the fiscal year ending December 31, 2023 through the fiscal year ending December 31, 2030 (“Management Projections”) for the Special Committee and Duff & Phelps in connection with the financial analysis for the Merger. These financial projections, which were based on the Company management’s estimates of the Company’s future financial performance as of the date provided, were prepared by the Company’s management for internal use and for use by Duff & Phelps in their respective financial analyses, and were not prepared with a view towards public disclosure or compliance with published guidelines of the SEC regarding forward-looking information or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or U.S. GAAP.
The Management Projections are not a guarantee of performance. They involve significant risks, uncertainties and assumptions. In compiling the projections, the Company’s management took into account historical performance, combined with estimates regarding revenue, operating loss and net loss. Although the projections are presented with numerical specificity, they were based on numerous assumptions and estimates as to future events made by our management that our management believed were prepared on a reasonable basis, reflected the best estimates and judgments available at that time and presented, to the best of the management’s knowledge and belief, the expected course of action and the expected future financial performance of the Company. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results, and shareholders are cautioned not to place undue reliance on the prospective financial information. In addition, factors such as industry performance, the market for the Company’s existing and new products, the competitive environment, expectations regarding future acquisitions or any other transactions and general business, economic, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of our management, may cause actual future results to differ materially from the results forecasted in these financial projections.
In addition, the projections generally do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the projections do not give effect to completion of the Merger or any changes to the Company’s operations or strategy that may be implemented after the time the projections were prepared. As a result, there can be no assurance that the projections will be realized, and actual results may be significantly different from those contained in the projections.
 
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Neither the Company, its independent registered public accounting firm, nor any other independent accounts have examined, compiled, or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon, nor have they given any opinion or any other form of assurance on such information or its achievability. The financial projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the Special Committee and Duff & Phelps, and are not included in this proxy statement in order to induce any shareholders to vote in favor of approval of the Merger Agreement or to elect not to seek appraisal for its, his or her Shares.
The following table sets forth a summary of the Management Projections prepared by the Company’s management and considered by the Special Committee and Duff & Phelps in connection with their analysis of the Proposed Transaction. For descriptions of business of the Company, please see the Company’s Annual Report. These projections have been considered by the Special Committee in connection with their analysis of the Merger and Duff & Phelps in connection with the delivery of its fairness opinion:
Management Projections
2023P
2024P
2025P
2026P
2027P
2028P
2029P
2030P
(in RMB thousands except percentages)
Revenues
384,662 607,961 877,327 1,140,931 1,422,145 1,740,426 2,055,540 2,406,577
Cost of Revenue
138,455 219,033 299,559 364,925 447,486 529,320 603,662 692,655
Gross Profit
246,207 388,928 577,767 776,006 974,659 1,211,105 1,451,878 1,713,923
Margin%
64.0% 64.0% 65.9% 68.0% 68.5% 69.6% 70.6% 71.2%
Capital Expenditures(1)
17,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
Net Working Capital
97,527 179,997 231,741 245,393 325,066 411,538 500,998 601,053
(1)
Capital expenditures include acquisition of property, plant and equipment and intangible assets.
In preparing the Management Projections, the Company’s management necessarily made certain assumptions about future financial factors affecting the Company’s business, including, primarily:

the Company will be able to successfully deliver its product offerings and services while maintaining consistent and high quality services;

the demand for products and services relating to the industry will continue in line with management’s expectations;

China’s overall economy will remain relatively stable, with no material change in competition adversely affecting the Company;

the Company’s effective tax rate is assumed to be in line with management’s expectations;

the Renminbi and the overall economy in China will generally remain stable, and that there will be no material adverse change in the competition, the industry, and relevant regulations affecting the Company; and

the Chinese economy will continue to recover from the COVID-19 pandemic and there will be no material deterioration of the COVID-19 pandemic globally.
NONE OF THE COMPANY OR ITS AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE PROJECTIONS OR THAT PROJECTED RESULTS WILL BE ACHIEVED.
BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL PROJECTIONS, THE COMPANY UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS,
 
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EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAW.
The summary of the Management Projections included in this proxy statement should not be considered in isolation or in lieu of the Company’s operating and other financial information determined in accordance with U.S. GAAP. See “Summary Financial Information — Selected Historical Financial Information” beginning on page 93.
The Management Projections are forward-looking statements. For information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Note Regarding Forward-Looking Statements” beginning on page 100 and “Item 3. Key Information — 3.D. Risk Factors” included in the Company’s Annual Report, incorporated by reference into this proxy statement.
For the foregoing reasons, as well as the bases and assumptions on which the Management Projections were compiled, the inclusion of specific portions of the Management Projections in this proxy statement should not be regarded as an indication that the Company, the Special Committee (or its financial advisor) or the Board considers such projections to be an accurate prediction of future events, and the projections should not be relied on as such an indication. No one has made or is making any representation to any shareholders of the Company or anyone else regarding the information included in the Management Projections discussed above.
Opinion of the Special Committee’s Financial Advisor
In connection with its opinion, Duff & Phelps has made such reviews, analyses and inquiries as it has deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of its opinion included, but were not limited to, the items summarized below:

reviewed the Company’s annual reports and audited financial statements on Form 20-F filed with the SEC for the years ended December 31, 2019 through December 31, 2022 and the Company’s unaudited interim financial statements for the six months ended June 30, 2021 and June 30, 2022 included in the Company’s Form 6-K filed with the SEC;

reviewed certain unaudited and segment financial information for the Company for the years ended December 31, 2019 through December 31, 2022, and for the six months ended June 30, 2021, June 30, 2022 and June 30, 2023, provided by the management of the Company;

reviewed a detailed financial projection model for the Company for the years ending December 31, 2023 through December 31, 2030, prepared and provided to Duff & Phelps by the management of the Company, upon which Duff & Phelps has relied, with the Company’s and the Special Committee’s consent, in performing its analysis (collectively, the “Management Projections”);

reviewed other internal documents relating to the history, current operations, and probable future outlook of the Company, provided to Duff & Phelps by the management of the Company;

received and reviewed a letter dated October 10, 2023 from the management of the Company, which made certain representations as to historical financial information for the Company, the Management Projections and the underlying assumptions of such projections (the “Management Representation Letter”);

reviewed a draft of the Merger Agreement dated as of October 8, 2023;

reviewed a draft of the Rollover and Support Agreement by and between Parent and the parties listed as “Rollover Shareholders” in Schedule A thereto dated as of October 8, 2023;

discussed the information referred to above and the background and other elements of the Merger with the management of the Company;
 
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reviewed the historical trading price and trading volume of the ADSs and the publicly traded securities of certain other companies that Duff & Phelps deemed relevant;

performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques including a discounted cash flow analysis, an analysis of selected public companies that Duff & Phelps deemed relevant, and an analysis of selected transactions that Duff & Phelps deemed relevant; and

conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.
In performing its analyses and rendering its opinion with respect to the Merger, Duff & Phelps, with the Company’s and the Special Committee’s consent:

relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including the management of the Company, and did not independently verify such information;

relied upon the fact that the Special Committee, the Board and the Company have been advised by counsel as to all legal matters with respect to the Merger, including whether all procedures required by law to be taken in connection with the Merger have been duly, validly and timely taken;

assumed that any estimates, evaluations, forecasts and projections furnished to Duff & Phelps, including, without limitation, the Management Projections, were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same, and Duff & Phelps expresses no opinion with respect to such estimates, evaluations, forecasts or projections or the underlying assumptions thereof;

assumed that information supplied and representations made by the management of the Company regarding the Company and the Merger are accurate in all material respects and do not omit to state a material fact in respect of the Company and the Merger necessary to make the information provided and the representations made not misleading in light of the circumstances under which the information was supplied and the representations were made;

assumed that the representations and warranties made in the Transaction Documents and the Management Representation Letter are accurate in all material respects;

assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;

assumed that there has been no material change in the assets, liabilities (contingent or otherwise), financial condition, results of operations, business, or prospects of the Company since the date of the most recent financial statements and other information made available to Duff & Phelps, and that there is no information or facts that would make the information reviewed by Duff & Phelps incomplete or misleading;

assumed that all of the conditions required to implement the Merger will be satisfied and that the Merger will be completed in accordance with the Transaction Documents without any amendments thereto or any waivers of any terms or conditions thereof; and

assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or the contemplated benefits expected to be derived in the Merger.
To the extent that any of the foregoing assumptions or any of the facts on which the opinion is based prove to be untrue in any material respect, Duff & Phelps’ opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of its opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Merger.
Duff & Phelps prepared its opinion effective as of October 11, 2023. Its opinion was necessarily based upon market, economic, financial, and other conditions as they existed and can be evaluated as of October 11, 2023, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any
 
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fact or matter affecting its opinion which may come or be brought to the attention of Duff & Phelps after October 11, 2023. The credit, financial and stock markets have been experiencing unusual volatility and Duff & Phelps expresses no opinion or view as to any potential effects of such volatility on the Company or the Merger.
Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Other than in connection with certain investment banking services provided by Duff & Phelps and Kroll Securities, LLC to the Special Committee (including a pre-signing market check with certain potential buyers), Duff & Phelps has not been requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Merger, the assets, businesses or operations of the Company, or any alternatives to the Merger, (ii) negotiate the terms of the Merger, and therefore, Duff & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Merger Agreement and the Merger, or (iii) advise the Special Committee or any other party with respect to alternatives to the Merger. Duff & Phelps did not undertake an independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company is or may be a party or is or may be subject.
Duff & Phelps is not expressing any opinion as to the market price or value of the Company’s Shares or ADSs (or anything else) after the announcement or the consummation of the Merger. Duff & Phelps’ opinion should not be construed as a valuation opinion, a credit rating, a solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter. The issuance of Duff & Phelps’ opinion was approved by an authorized opinion review committee of Duff & Phelps.
In rendering its opinion, Duff & Phelps was not expressing any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the Per Share Merger Consideration or Per ADS Merger Consideration, or with respect to the fairness of any such compensation.
Duff & Phelps’ opinion was furnished solely for the use and benefit of the Special Committee in connection with its consideration of the Merger and is not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff & Phelps’ express consent, except that a copy of its opinion may be included in the filings with the SEC in relation to the Merger. Duff & Phelps’ opinion (i) does not address the merits of the underlying business decision to enter into the Merger versus any alternative strategy or transaction; (ii) does not address any transaction related to the Merger; (iii) is not a recommendation as to how the Special Committee, the Board or any other person (including security holders of the Company) should vote or act with respect to any matters relating to the Merger, or whether to proceed with the Merger or any related transaction; and (iv) does not indicate that the Per Share Merger Consideration or Per ADS Merger Consideration is the best possibly attainable under any circumstances; instead, it merely states whether the Per Share Merger Consideration or Per ADS Merger Consideration is within or above a range suggested by certain financial analyses. The decision as to whether to proceed with the Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the opinion is based. Duff & Phelps’ opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.
Duff & Phelps’ opinion is solely that of Duff & Phelps, and Duff & Phelps’ liability in connection with the opinion shall be limited in accordance with the terms set forth in D&P Engagement Letter. Duff & Phelps’ opinion is confidential, and its use and disclosure is strictly limited in accordance with the terms set forth in the D&P Engagement Letter.
Summary of Financial Analysis
Set forth below is a summary of the material analyses performed by Duff & Phelps in connection with the delivery of its opinion to the Special Committee. This summary is qualified in its entirety by reference to the
 
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full text of Duff & Phelps’ opinion, attached hereto as Annex C. While this summary describes the analyses and factors that Duff & Phelps deemed material in its presentation to the Special Committee, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis. In arriving at its opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it in rendering the fairness opinion without considering all analyses and factors could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.
The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses.
Discounted Cash Flow Analysis
Duff & Phelps performed a discounted cash flow analysis of the projected future unlevered free cash flows attributable to the Company for the fiscal years ending December 31, 2023 through December 31, 2030, with unlevered “free cash flow” defined as cash that is available either to reinvest or to distribute to security holders. The discounted cash flow analysis was used to determine the net present value of estimated future free cash flows using a weighted average cost of capital as the applicable discount rate. For the purposes of its discounted cash flow analysis, Duff & Phelps used and relied upon the Management Projections, which are described in this Proxy Statement in the section entitled “Special Factors — Certain Financial Projections” beginning on page 35. The costs associated with the Company being a publicly-listed company, as provided by the management of the Company, were excluded from the Management Projections because such costs would likely be eliminated as a result of the Merger.
Duff & Phelps compared the projected 2030 growth and margin metrics of the Company to the LTM and near-term projected growth and margin metrics of the laboratory testing selected public companies, as well as comparative capital spending, and other characteristics relative to the selected public companies. Duff & Phelps estimated the net present value of all cash flows attributable to the Company after fiscal year 2030 (the “Terminal Value”) using a terminal EBITDA multiple as of 11.0x, which took into consideration the financial performance metrics and valuation multiples of a group of selected public companies in the laboratory testing sector. Duff & Phelps also reviewed the terminal revenue multiple implied from the resulting terminal value. Duff & Phelps used discount rates ranging from 22.5% to 27.5% to discount the projected free cash flows and the Terminal Value. Duff & Phelps estimated the Company’s discount rates by considering several factors including the Company’s: (1) current stage of its life cycle, (2) projected growth and financial performance, and (3) risks to achieve the projections, including execution, and competitive risks, among others. Duff & Phelps believes that this range of discount rates is consistent with the rate of return that security holders could expect to realize on alternative investment opportunities with similar risk profiles.
Based on these assumptions, Duff & Phelps’ discounted cash flow analysis resulted in an estimated enterprise value for the Company of RMB 370.0 million to RMB 680.0 million and a range on implied values of the ADSs of US$0.69 to US$1.15 (without taking into account the ADS Ratio Change).
Selected Public Companies and Merger and Acquisition Transactions Analyses
Duff & Phelps analyzed selected public companies and selected merger and acquisition transactions for purposes of estimating valuation multiples with which to calculate a range of implied enterprise values of the Company. This collective analysis was based on publicly available information and is described in more detail in the sections that follow.
 
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The companies used for comparative purposes in the following analysis were not directly comparable to the Company, and the transactions used for comparative purposes in the following analysis were not directly comparable to the Merger. Duff & Phelps does not have access to nonpublic information of any of the companies used for comparative purposes. Accordingly, a complete valuation analysis of the Company and the Merger cannot rely solely upon a quantitative review of the selected public companies and selected transactions, but involves complex considerations and judgments concerning differences in financial and operating characteristics of such companies and targets, as well as other factors that could affect their value relative to that of the Company. Therefore, the selected public companies and the selected merger and acquisition transactions analyses are subject to certain limitations.
Selected Public Companies Analysis.   Duff & Phelps compared certain financial information of the Company to corresponding data and ratios from publicly traded companies in the interactive media and services industry that Duff & Phelps deemed relevant to its analysis. For purposes of its analysis, Duff & Phelps used certain publicly available historical financial data and consensus equity analyst estimates for the selected publicly traded companies. The twelve companies in the cancer diagnostics and early screening sector and eight companies in the laboratory testing sector included in the selected public company analysis in the interactive media and services industry were:
Cancer Diagnostics & Early Screening Companies

Exact Sciences Corporation

Natera, Inc.

Guardant Health, Inc.

Myriad Genetics, Inc.

New Horizon Health Limited

Veracyte, Inc.

Adaptive Biotechnologies Corporation

Fulgent Genetics, Inc.

Castle Biosciences, Inc.

Invitae Corporation

Burning Rock Biotech Limited

Fresh2 Group Limited
Laboratory Testing Companies

Laboratory Corporation of America Holdings

Quest Diagnostics Incorporated

Eurofins Scientific SE

Sonic Healthcare Limited

SYNLAB AG

H.U. Group Holdings, Inc.

BML, Inc.

Australian Clinical Labs Limited
Duff & Phelps selected these companies for its analysis based on their relative similarity, primarily in terms of business model, to that of the Company.
The tables below summarize certain observed trading multiples and historical and projected financial performance, on an aggregate basis, of the selected public companies. The estimates for 2023, 2024 and 2025 in the tables below with respect to the selected public companies were derived based on information for the
 
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12-month periods ending closest to the calendar year ends for which information was available. Data related to the Company’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) were adjusted for purposes of this analysis to eliminate public company costs and non-recurring income (expenses).
Due to the limited comparability of the selected public companies’ financial metrics relative to the Company, rather than applying a range of selected multiples from a review of the public companies, Duff & Phelps reviewed various valuation multiples for the Company implied by the valuation range determined from the discounted cash flow analysis in the context of the Company’s relative size, growth in revenue and profits, profit margins, capital spending and other characteristics that it deemed relevant.
REVENUE GROWTH
EBITDA MARGIN
Company
3-Yr.
CAGR
LTM
2023
2024
2025
Proj. 3-Yr.
CAGR
3-YR
AVG
LTM
2023
2024
2025
Exact Sciences Corporation
33.5% 18.7% 18.1% 14.5% 14.3% 15.6% -25.7% -8.7% 7.2% 10.8% 15.9%
Natera, Inc.
39.5 28.7 25.8 23.6 23.7 24.4 -63.4 -52.9 -42.2 -23.4 -9.2
Guardant Health, Inc.
28.0 25.0 22.0 22.6 26.6 23.7 -100.1 -99.7 -65.1 -42.6 -32.4
Myriad Genetics, Inc.
2.0 4.0 9.1 8.7 7.0 8.3 -14.0 -17.2 -7.4 -1.3 0.7
New Horizon Health Limited
135.9 245.3 122.3 47.7 45.5 68.4 -110.5 -7.4 -1.1 12.5 21.2
Veracyte, Inc.
35.1 22.5 16.7 12.1 12.2 13.6 -13.6 -1.8 -2.8 1.0 6.6
Adaptive Biotechnologies Corporation
29.6 18.7 11.7 25.6 24.8 20.5 -123.0 -87.7 -75.7 -52.3 -27.7
Fulgent Genetics, Inc.
167.0 -66.8 -57.9 14.8 16.6 -17.4 58.3 -14.3 -13.4 -4.7 2.8
Castle Biosciences, Inc.
38.2 52.0 33.6 13.7 28.4 24.9 -36.8 -52.2 -53.4 -39.4 -15.4
Invitae Corporation
33.5 -1.4 -5.5 12.4 14.1 6.6 -154.4 -82.4 -80.4 -60.9 -51.7
Burning Rock Biotech Limited
13.8 8.4 NA NA NA NA -129.3 -111.4 NA -25.1 NA
Fresh2 Group Limited
3.6 -40.0 NA NA NA NA -555.6 -827.3 NA NA NA
Mean 46.6% 26.3% 19.6% 19.6% 21.3% 18.9% -105.7% -113.6% -33.4% -20.5% -8.9%
Median 33.5% 18.7% 17.4% 14.6% 20.1% 18.1% -81.8% -52.6% -27.8% -23.4% -4.3%
Genetron Holdings Limited
26.2% -0.9% -40.9% 58.1% 44.3% 10.5% -75.2% -94.6% -72.9% -43.4% -16.3%
Genetron Holdings Limited (excluding Covid testing
services)
7.4% -31.7% -4.2% 58.4% 44.3% 29.9%