Ledman Acquires SubsidiaTransparent Led screenry of Vision C
Feb. 15, 2016 Ledman Optoelectronic Co., Ltd. ("Ledman") Announced to acquire Vision China New Culture Media Co., Ltd. which is subsidiary of Vision China Media, for an aggregate consideration of RMB780 million (US$119 million) (the "Consideration" and the "Transaction"). Ledman is not only a leading manufacturer of LED products but also a sports resources operator in China, and listed on the Shenzhen Stock Exchange (300162.SZ). Vision China Media Inc. (NASDAQ: VISN，Vision China Media Group Co., Ltd. and Shenzhen HDTV Industrial Investment Co., Ltd.， collectively "Vision China Subsidiaries") is China's largest out-of-home digital television and advertising network on mass transportation systems and the leading provider of urban mass transit Wi-Fi
Prior to the Transaction, the Vision China Media completed a restructuring to transfer Vision China Media's subway mobile TV advertising business (“Target Business”) to Vision China New Culture Media Co., Ltd. ("New Culture"), an entity wholly owned by Vision China Media Since January 1, 2016, New Culture has been the operating entity of the Target Business. Upon the closing of the Transaction, Ledman will hold 100% equity interest of New Culture.
Pursuant to the equity transfer agreement, Ledman will pay RMB390 million in cash and the other RMB390 million in the form of 20,774,680 newly issued shares of Ledman (the "Share Consideration"), valued at RMB18.8 per share, which is 90% of Ledman shares' average trading price in the 20 trading days immediately before the public announcement of the approval of the Transaction by Ledman's board of directors. Within 60 days after the closing of the Transaction, Ledman will pay an installment of RMB130 million in cash. Within 120 days after the closing of the Transaction, Ledman will pay the remaining amount of RMB260 million in cash. The issuance of Ledman's shares shall be subject to the China Securities Regulatory Commission approval. Upon the completion of the Transaction, Vision China Media, through the Sellers, will indirectly own approximately 5.6% of Ledman. The Share Consideration will be subject to a 36-month lock-up.
Vision China Subsidiaries and their related parties also agreed to not engage in any business that competes or may compete with the Target Business for a period of eight years. The management team members and other key employees of New Culture have each entered into an employment contract for a term of five years or more, a confidentiality agreement and a non-competition agreement pursuant to which such person have agreed to not engage in the Target Business or any business that competes or may compete with the Target Business for a period of three years after the termination of his or her employment.
According to the profit compensation agreement, in the event that the consolidated net profits attributable to the shareholders (excluding extraordinary items) of New Culture in any of the fiscal years 2016, 2017 and 2018 (collectively, the "Covered Period") are less than the profit target for such fiscal year - RMB60 million, RMB80 million and RMB100 million, respectively (the "Profit Targets"), Vision China Subsidiaries will compensate Ledman for the deficiency by returning a certain amount of the Share Consideration to Ledman. In the event that the Share Consideration is not sufficient to compensate for such deficiency, Vision China Subsidiaries are required to pay compensation in cash. The compensation amount will be calculated based on a pre-determined formula and subject to an aggregate cap in an amount equal to the amount of the Consideration.
Ledman will allocate 50% of the surplus of the accumulated net profits of the Target Business in excess of the total Profit Targets as a bonus to the members of the management team of New Culture who are still employed at New Culture at the end of the Covered Period.
The consummation of the Transaction remains subject to the requisite internal approvals of the relevant parties and regulatory clearance, including that by the China Securities Regulatory Commission and other relevant regulatory authorities. There is no assurance that these approvals or regulatory clearance will be obtained within the expected time frame, or at all.
Ledman is entering the business field of advertisement media through this transaction and will explore his sports industrial business further more.
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