Monday, China Architectural Engineering, Inc. (CAEI) said it has signed a letter of intent to acquire 60% ownership of Shanghai ConnGame for 25 million of its common shares. The company also said it has withdrawn its previously-announced private placement of 17 million common shares.
Zhuhai, China-based China Architectural is a maker of high-end building envelope systems. Shanghai ConnGame develops and operates massively multiplayer online role-playing games, a genre of online role-playing games popular in China. ConnGame focuses on self-developed game titles that are based on China's iconic characters and nostalgic epochs.
Completion of the transaction is subject to negotiation of a definitive equity-transfer agreement that will be subject to a number of closing conditions, including shareholder and regulatory approvals, China Architectural said.
Ken Yi Luo, chief executive officer of China Architectural, said, "While at first glance CAE and ConnGame may appear to share few common grounds, we expect the acquisition of ConnGame will further expand CAE's core capabilities and accelerate our planned transformation into a high- end architectural design consultant and service provider, as we intend to leverage ConnGame's robust design engines and virtual applications to broaden our service capabilities and scope of architectural collaborations."
Expanding further on the synergy of the acquisition, Luo added, "We believe our acquisition of ConnGame will enable CAE to not only continue to take greater advantage of our core architectural engineering and design market but also China's large and rapidly growing online game market."
Further, China Architectural said it has withdrawn its previously-announced private placement of its 17 million common stock as the company has terminated its letter of intent to purchase land from Zhejiang Nine Dragon Co. On August 11, China Architectural had announced a letter of intent to to purchase 1.6 million square feet from Zhejiang Nine Dragon at $34 per square foot, amounting to a total consideration of $55 million. The cancellation of private placement is in anticipation of issuing 25 million new shares upon the closing of the currently announced acquisition, China Architectural said.
CAEI is losing $0.05 or 3.85% and is trading at $1.25 on a volume of two thousand shares on the Nasdaq.
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