Charm Enters Definitive Agreement for Going Private Transaction

BEIJING, May 19, 2014 /PRNewswire-FirstCall/ -- Charm Communications Inc. CHRM ("Charm" or the "Company"), a leading advertising agency in China, announced today that it has entered into an Agreement and Plan of Merger, dated May 19, 2014 (the "Merger Agreement"), with Engadin Parent Limited ("Parent") and Engadin Merger Limited ("Merger Sub"), pursuant to which Parent will acquire Charm (the "Transaction") at a price of US$4.70 in cash per American Depositary Share of the Company ("ADS", each ADS representing two Class A ordinary shares of the Company), or US$2.35 in cash per Class A ordinary share of the Company, and US$2.35 in cash per Class B ordinary share of the Company. This represents a 14.3% premium over the Company's 30 trading day volume-weighted average price of $4.11 per ADS as quoted by NASDAQ on September 27, 2013, the last trading day prior to the Company's announcement on September 30, 2013 that it had received a "going private" proposal.

Immediately after the completion of the Transaction, Parent will be beneficially owned by He Dang, the chairman of the board of directors (the "Founder") and certain of his affiliates including Merry Circle Trading Limited, a British Virgin Islands company controlled by the Founder ("Merry Circle") and Honour Idea Limited, a British Virgin Islands company owned by the Founder ("Honour Idea" and, collectively with Merry Circle, the "Founder Shareholders"), and an investment fund affiliated with CMC Capital Partners HK Limited (the "Sponsor" and, collectively with Founder and Founder Shareholders, the "Consortium"). The Consortium collectively beneficially owns approximately 55.3% of the outstanding shares of the Company (excluding outstanding options of the Company) and intends to fund the Transaction, including the acquisition of ADSs and ordinary shares of the Company not already owned by the Consortium, through a combination of proceeds from a loan facility in the amount of US$60,000,000 from Bank of China Limited, London Branch, equity financing to be provided by the Sponsor and available cash of the Company and its subsidiaries. In connection with the Merger Agreement, the Founder and the Founder Shareholders also have entered into a rollover and support agreement with Parent and Merger Sub and have agreed, among other things, to vote all of their ordinary shares (including those represented by ADSs) in favor of the authorization and approval of the Merger Agreement and the Transaction.

Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, at the effective time of the merger the Company will become a wholly-owned subsidiary of Parent and each of the Company's ordinary shares issued and outstanding immediately prior to the effective time of the merger (including ordinary shares represented by ADSs) will be converted into the right to receive US$2.35 in cash, without interest, except for the ordinary shares (including ordinary shares represented by ADSs): (i) beneficially owned by the Founder Shareholders, which will be cancelled without receiving any consideration in the merger, (ii) beneficially owned by the Company or any direct or indirect wholly owned subsidiary of the Company, and (iii) owned by holders of such ordinary shares who have validly exercised and not lost their appraisal rights pursuant to Section 238 of the Cayman Islands Companies Law, as amended.

The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee of Independent Directors formed by the Board of Directors, approved the Merger Agreement and the Transaction and resolved to recommend that the Company's shareholders vote to approve the Merger Agreement and the Transaction. The Special Committee, which is composed solely of directors unrelated to any of Parent, Merger Sub, the Consortium or any of the management members of the Company, negotiated the terms of the Merger Agreement with the assistance of its independent financial and legal advisors.

The Transaction, which is currently expected to close before the end of the third quarter 2014, is subject to various closing conditions, including a condition that the Merger Agreement and the Transaction be authorized and approved by an affirmative vote of shareholders representing two-thirds or more of the voting power of the ordinary shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders which will be convened to consider the approval of the Merger Agreement and the Transaction ("Shareholder Approval"). If completed, the Transaction will result in the Company becoming a privately-held company and its ADSs will no longer be listed on the NASDAQ Global Market.

China Renaissance Securities (Hong Kong) Limited is serving as financial advisor to the Special Committee. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP is serving as U.S. legal advisor to the Special Committee and Maples and Calder is serving as Cayman Islands legal advisor to the Special Committee. Davis Polk & Wardwell LLP is serving as U.S. legal advisor to China Renaissance Securities (Hong Kong) Limited.

Simpson Thacher & Bartlett is serving as U.S. legal advisor to the Consortium and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Consortium. Weil, Gotshal & Manges LLP is serving as U.S. legal advisor to the Sponsor. DLA Piper is serving as legal advisor to Bank of China Limited, London Branch.

Go-Shop Period

The Company is permitted to initiate, solicit and encourage any alternative acquisition proposals from third parties, and to provide non-public information to and engage in discussions or negotiations with third parties with respect to alternative acquisition proposals, during a 30-day period following the execution of the Merger Agreement (the "Go-Shop Period"). Immediately upon the expiration of the Go-Shop Period, the Company will become subject to customary "no-shop" restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to and engage in discussions or negotiations with third parties regarding alternative acquisition proposals.

Notwithstanding the limitations applicable after the expiration of the Go-Shop Period, prior to the receipt of Shareholder Approval, the Company may under certain circumstances provide information to third parties with respect to unsolicited alternative acquisition proposals and, if the Special Committee determines, among other things, that any acquisition proposal constitutes or is reasonably likely to result in a superior proposal under the Merger Agreement, participate in discussions or negotiations with the third party that submitted the superior proposal.

Additional Information about the Transaction

The Company will furnish to the Securities and Exchange Commission (the "SEC") a report on Form 6-K regarding the Transaction, which will include the Merger Agreement related to the Transaction. All parties desiring details regarding the Transaction are urged to review these documents, which are available at the SEC's website (http://www.sec.gov).

In connection with the Transaction, the Company will prepare and mail a proxy statement to its shareholders. In addition, certain participants in the Transaction will prepare and mail to the Company's shareholders a Schedule 13E-3 transaction statement. These documents will be filed with or furnished to the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE TRANSACTION AND RELATED MATTERS. In addition to receiving the proxy statement and Schedule 13E-3 transaction statement by mail, shareholders also will be able to obtain these documents, as well as other filings containing information about the Company, the Transaction and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these documents can be obtained, without charge, by contacting the Company at the following address and/or phone number:

Ms. Jenny Wang
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2527
Email: ir@charmgroup.cn

The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from our shareholders with respect to the Transaction. Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in the proxy statement and Schedule 13E-3 transaction statement relating to the Transaction when it is filed with the SEC. Additional information regarding the interests of such potential participants will be included in the proxy statement and Schedule 13E-3 transaction statement and the other relevant documents filed with the SEC when they become available.

This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities and it is not a substitute for any proxy statement or other filings that may be made with the SEC should the Transaction proceed.

About Charm

Charm Communications Inc. CHRM is a leading advertising agency group in China that offers integrated advertising services with particular focus on television and the internet. Charm's integrated advertising services include full media planning and buying, as well as creative and branding services. Charm has built a full service digital advertising platform, which offers digital campaign capabilities across all key digital media, including search engines, display portals, online video sites and social networking services. Charm also secures advertising inventory and other advertising rights, such as sponsorships and branded content, from premium media networks and resells to clients as part of its integrated media offerings. Charm's clients include China's top domestic brands, as well as some major international brands, across a wide range of industries. Since 2003 Charm has been the top agency every year for China's leading television network, China Central Television ("CCTV"). For more information, please go to http://ir.charmgroup.cn.

Safe Harbor and Informational Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "if," "will," "expected," and similar statements. Forward-looking statements involve inherent risks, uncertainties and assumptions. Risks, uncertainties and assumptions include: uncertainties as to how the Company's shareholders will vote at the meeting of shareholders; the possibility that competing offers will be made; the possibility that debt financing may not be available; the possibility that various closing conditions for the transaction may not be satisfied or waived; and other risks and uncertainties discussed in documents filed with the SEC by the Company, as well as the Schedule 13E-3 transaction statement and the proxy statement to be filed by the Company. These forward-looking statements reflect the Company's expectations as of the date of this press release. You should not rely upon these forward-looking statements as predictions of future events. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Ms. Jenny Wang
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2527
Email: ir@charmgroup.cn

In the United States:

Mr. Justin Knapp
Ogilvy Financial, U.S.
Phone: +1-616-551-9714
Email: chrm@ogilvy.com

SOURCE Charm Communications Inc.