Gracell Biotechnologies Completes Merger with AstraZeneca and Becomes Wholly-Owned Subsidiary

On February 22, Gracell Biotechnologies Group announced the official completion of the previously announced merger agreement with AstraZeneca Group. Gracell Biotechnologies, AstraZeneca Treasury Limited ("Parent Company"), and Grey Wolf Merger Sub ("Merger Subsidiary") completed the merger in accordance with the terms and conditions set forth in the relevant agreements and merger plan ("Merger Agreement") signed on December 23, 2023. AstraZeneca Treasury Limited is a private limited company incorporated under the laws of England and Wales. The Merger Subsidiary is an exempted limited liability company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of the Parent Company. In this merger, the Merger Subsidiary merged with Gracell Biotechnologies, and Gracell Biotechnologies, as the surviving company, became a wholly owned subsidiary of the Parent Company ("Merger"). Upon completion of the merger, Gracell Biotechnologies ceased to be a publicly traded company and became a wholly owned subsidiary of the Parent Company.

The Merger Agreement was approved by the shareholders of Gracell Bio at an extraordinary general meeting held on February 19, 2024. According to its terms, each issued and outstanding ordinary share of the company with a par value of $0.0001 per share (hereinafter collectively referred to as "Share" or "Shares") prior to the effective time of the merger ("Effective Time"), except for (i) shares held by Parent, Merger Sub, and Gracell Bio or any of its subsidiaries (including shares represented by American Depositary Shares (hereinafter collectively referred to as "ADS"), with each ADS representing 5 Shares); (ii) shares held by Gracell Bio or the depositary (as defined below) and reserved for issuance and distribution under the company's equity incentive plan (the shares described in clauses (i) and (ii) are collectively referred to as "Excluded Shares"); (iii) shares represented by ADS; and (iv) shares held by shareholders who have validly exercised, not effectively withdrawn, or otherwise lost their right to dissent from the merger under Section 238 of the Companies Act (As Revised) of the Cayman Islands ("CICA") (the shares described in clause (iv) are defined as "Dissenting Shares"), have been canceled and converted into the right to receive, without interest, the following amounts: (1) $2.00 in cash per Share; and (2) one contingent value right ("CVR") per Share, which entitles the holder to receive a contingent payment of $0.30 in cash per CVR, without interest, upon the achievement of milestones ("Milestones") as specified in and subject to the CVR Agreement (as defined below), in each case subject to all applicable withholding taxes.

Each ADS (excluding ADSs representing Excluded Shares) issued and outstanding prior to the Effective Time, together with the shares represented thereby, has been cancelled and the corresponding value represents only the following rights: (1) a non-interest-bearing cash amount of $10.00 per ADS; and (2) 5 CVRs per ADS, each entitled to receive a contingent non-interest-bearing cash payment of $0.30 upon achievement of the respective milestone, in each case subject to the terms and conditions set forth in the Merger Agreement and the Deposit Agreement, dated January 7, 2021, among the Company, The Bank of New York Mellon, and all holders of ADSs issued in the ordinary course under such agreement, and net of any applicable withholding taxes.

Each warrant for issued shares that was not exercised prior to the effective time has been canceled, with the corresponding value representing only the equivalent non-interest-bearing cash. The remaining unexercised portion of each warrant is equivalent to the Black-Scholes value (i.e., the underlying value of the warrant, with each share equivalent to $1.26618).

The excluded shares have been cancelled without any consideration; the dissenting shares have been cancelled, and their original holders will be entitled to receive the fair value determined in accordance with Article 238 of the CICA.

As of the Effective Time, each registered holder of Shares, each holder of Options and each registered holder of ADSs entitled to receive the applicable Merger Consideration will receive a transmittal letter providing for delivery of the Merger Consideration and instructing them on how to surrender their certificated Options or ADSs in exchange for the applicable Merger Consideration. These transmittal letters must be completed before such holders can receive the applicable Merger Consideration. Holders of certificated ADSs should wait to receive the transmittal letter before surrendering their ADSs. Holders of ADSs in “street name” held by brokers, banks or other nominees, or uncertificated registered holders of ADSs, need not take any additional action to receive the applicable Merger Consideration and should direct any questions regarding receipt of the Merger Consideration to their broker, bank or other nominee.

Gracell Biotechnologies Inc. also announced that it has submitted an application to suspend trading of its ADSs on the Nasdaq Global Select Market ("Nasdaq") effective from February 22, 2024 (New York time). The company has requested Nasdaq to file Form 25 with the U.S. Securities and Exchange Commission (“SEC”) to notify the SEC of the company’s delisting from Nasdaq. The delisting will become officially effective 10 days after the filing of Form 25. The company plans to file Form 15 with the SEC within approximately 10 days after submitting Form 25 to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended. The company's obligation to file specific reports and forms with the SEC (including Forms 20-F and 6-K) will be suspended upon the filing of Form 15 and will officially terminate upon the effectiveness of deregistration (90 days after the filing of Form 25), unless the SEC raises any objections.

Editor: Muyan

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