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Huazhang Technology to Purchase Equity Interest in 2 Chinese Headbox Suppliers for RMB 34m
Friday 19 May 2017

19 May 2017 - China-based investment holding company Huahang Technology Holding Ltd. has partnered with three individuals to purchase of the equity interest of Hong Kong-based headbox distributors Hangzhou MCN and Hangzhou Haorong, and the Sunplus Contracts for an initial consideration of RMB 34m (USD 4.93m), the company said.
RMB 9.0m (USD 1.35m) will be settled partly by cash and partly by the company's allotment and issue of new shares at completion, at an issue price of HKD 2.55 per share, at a premium of approximately 4.94% to the closing price of HKD 2.43 per share as quoted on the Stock Exchange on May 17.
In the event that the average net profit after taxation of the two target companies for the two years ended 31 December 2018 equals or exceeds RMB 4m (USD 600,000), the initial consideration for the transactions contemplated under the sale and purchase agreement will be adjusted.
For the year ended 31 December 2016, unaudited net profit after taxation of the two target companies recorded RMB 1.25m (USD 187,500).
Hangzhou MCN and Hangzhou Haorong are principally engaged in the research, development and distribution of headbox.
The company has developed various kinds of stainless headboxes including rectifier roll headbox, hydraulic headbox, turbulence channel headbox, inclined wire and cylinder former headbox and turbulent flow away headbox etc. and Hangzhou Haorong has developed various kinds of high frequency shake, headbox control systems.
In addition, the sunplus contracts consist of the benefit of two partly unperformed contracts entered into by sunplus industrial in relation to the sale and distribution of headbox to its customers based in the Republic of Indonesia and the Republic of India.
The aggregate amount of receivables under the sunplus contracts as at the date of the sale and purchase agreement was approximately USD 25,000.
Huahang Technology said the acquisition of equity interests would offer synergy between its existing products and headbox.
In the meantime, the acquisition of the Equity Interest would be able to diversify the group's products and lead the group to own one of the core technologies of paper making production equipment. It benefits our export business, which is in line with the national strategy 'A Belt, A Road'.
Huazhang Technology Holding Ltd. is principally engaged in the research and development, manufacture and sale of industrial automation systems and sludge treatment products for the paper-making industry and other industries. 
Details
Date Published: 19/05/2017
Target: Hangzhou MCN, Hangzhou Haorong, and Sunplus Contracts
Country: China
Deal Size: 4.93m (USD)
Sector: Machinery/Engineering
Type: Corporate acquisition
Financing: Cash
Status: Closed
Vendor:
Buyer: Huahang Technology Holding, three undisclosed individuals
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