HONG KONG, Sept 7, 2010 - (ACN Newswire) - VODone Limited (the "Company"; stock code: 0082), a leading new media company in China, is pleased to announce that it, Shenzhen Tastech and Bright Way Technology (the "Vendors"), and KUANG Yixun and HU Zhenning (the "JV Partners") entered into the Asset Purchase Terms and Conditions on 4 September 2010 (the "Asset Purchase Terms and Conditions"), pursuant to which it was conditionally agreed that the Company will set up a joint venture company (the "Joint Venture Company"), which will purchase, and the Vendors will sell, the Target Assets, being all of the respective assets of the Vendors ("Target Assets"). The Vendors are principally engaged in developing, designing and providing maintenance services of mobile communication products.
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The total consideration for the Acquisition is RMB78,400,000. The total consideration will be settled by the Company with RMB20,000,000 in cash and by issuing 28,694,372 consideration shares.
PROFIT GUARANTEE
Pursuant to the Asset Purchase Terms and Conditions, the parties have agreed that the consideration for the Acquisition will be adjusted by reference to the net profit before tax of the Joint Venture Company for the period from 1 September 2010 to 31 December 2010 and each of the two years ending 31 December 2012 as shown below:
Period Involved Profit Before Tax
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Period from 1 September 2010 to 31 December 2010 RMB10,000,000
Financial year ending 31 December 2011 RMB36,000,000
Financial year ending 31 December 2012 RMB50,000,000
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The number of Consideration Shares are agreed to be adjusted with reference to the relevant Consideration Adjustment and in accordance with the adjustment mechanism below.
Pursuant to the adjustment mechanism set out in the Asset Purchase Terms and Conditions, if there is a shortfall between the Profit Target and the actual audited net profit before tax of the Joint Venture Company for any of the period from 1 September 2010 to 31 December 2010 or the two years ending 31 December 2012, the Company shall be entitled to recover and request the Vendors to sell part of the Consideration Shares at no cost.
The formula for calculating the number of Shares to be recovered in the event the Profit Targets are not met is as follows:
(Profit Target - Actual Audited Net Profit
Number of Consideration before Tax) X exchange rate for conversion
Shares to be recovered = into HK$ at the time of adjustment
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Issue Price
INFORMATION ON THE VENDORS
The Vendors are principally engaged in developing, designing and providing maintenance services of mobile communication products. The Vendors are the leading market providers of mobile communication technology products in the PRC, and provide full range of hardware design, software design, quality assurance testing, industrial design and structural design of mobile communication solutions. The range of products include features such as touch-screen, analog television, TV-OUT, full-screen touch, full-keyboard flip, vertical slide, horizontal slide, professional audio sounds and other multimedia features. The scope of services provided by the Vendors includes GSM mobile communication products, mobile hardware design (PCBA), mobile software design, mobile manufacturing, technical testing support and training, and provide assistance with FTA and CTA related testings. With solid R&D management and innovative business ideas, the Vendor's businesses have swiftly developed in recent years.
The Vendors have efficient, professional research and development teams. The Vendors have over 80% of their human resources as R&D and technical staffs with the majority of them having more than seven years of professional and extensive experience in product development. The Joint Venture Company anticipates an annual production capacity in excess of 10 million mobile handset by 2012.
REASONS FOR THE ACQUISITION
The Company has always been committed to the development of mobile Internet business. After long time development, the product line has achieved its preliminary framework by owning "Lottery View" mobile lottery, KKFUN mobile games applications, "Linfo" mobile Internet social community and mobile micro-video product line. The Company is one of the companies who develop most rapidly in the mobile Internet business industry in the PRC. After the completion of strategic framework of the product line, the mobile handset as the development core of the mobile Internet business, the Company will further integrate its upstream resources (mobile handset design houses and mobile handset manufacturers), and strengthen its business development layout of the mobile Internet business and the process of its standardized products.
Accordingly, the Directors believe the Acquisition will give the Company the following competitive strengths:-
1. the Acquisition will strengthen and enhance its mobile communications distribution channels;
2. the integration of upstream technical resources helps form the technology synergies which enables the Company to accelerate its development and application of new mobile handset chips and operating systems in the PRC;
3. through the cooperation with mobile handset design houses, the Company can strengthen its existing extensive mobile Internet products for its end-users by providing one-stop service experience, thus in the future, in reliance of the capabilities of the Joint Venture Company, the Company and the Joint Venture Company will jointly promote the Company's brand name and its branded products, such as mobile handsets, hardware, software and software services as a desirable combination to fully enhance the competitiveness and profitability of the products of the Company to create a new "hardware and software services" profit model; and
4. the Acquisition allows the Company to complete its mobile Internet product chain, and enables the Company to explore the replicable integration model focusing on the upstream resources, thus accelerating the strength of integration model as to its upstream resources, and establishing the economic of scale as to the users and profitability of the "hardware and software services".
After the Acquisition, it is expected that the Company will target to strengthen the product line portfolio and improve the industry chain structure as well. It will further enhance the product innovation and the differentiation of design, facilitating the establishment of powerful quality management and after-sales service platform, coupled with highly efficient logistics and production line, and incorporating the excellent research and development together with the service team, so that it will rapidly strengthen the competitiveness of the Company and allowing it to be one of the leading mobile design companies in the PRC.
Contact:
Wonderful Sky Financial Group Limited
Joanne Chan / Annie Choi / Stacy Zhang / Ada Kwong
Tel：+852 2851 1038
Fax：+852 2815 1352
E-mail: joannechan@wsfg.hk / anniechoi@wsfg.hk / stacyzhang@wsfg.hk / adakwong@wsfg.hk
Topic: Merger & Acquisition
Source: V1 Group Limited
Sectors: Daily Finance, Wireless, Apps
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