Rongyu Group Co., Ltd. (002622.SZ) recently announced plans to buy out Guangzhou Junbo Network Technology Inc., as reported by CNFOL.
Rongyu Group plans to finance the acquisition in cash.
The transaction price is currently estimated to be RMB 975 million, but this has not been finally settled.
Why It Matters:
- Founded in 2012, Guangzhou Junbo is mainly engaged in online marketing services. The company went public on China‘s New Third Board in December 2015 with a code of 835103. The company promises to generate net profits of no less than RMB 75 million, RMB 97.5 million, and RMB 127 million respectively for 2017, 2018, and 2019.
- At the end of 2016 when the company conducted its latest private offering, Guangzhou Junbo’s valuation was RMB 480 million. The current estimated buyout price of RMB 975 million represents a 103% premium over that valuation.
- Rongyu Group is principally engaged in the research and development, manufacture, and distribution of electrical switch products. The company’s net profit for 2016 dropped 82.66% from the previous year to RMB 15.67 million. Rongyu expects to enter the IT industry through the acquisition.