Chinese electric motors developer Harbin Electric, Inc. (HRBN) announced Tuesday that its unit, Harbin Tech Full Electric Co. Ltd., signed a definitive agreement to acquire all the outstanding shares and assets of industrial rotary motors maker Xi'an Simo Motor Inc.
As per the definitive deal signed on October 2, Harbin Tech would pay an amount between 6 to 8 times the 2008 audited net profits of Simo Motor as a consideration for the shares and assets. For the fiscal year ended December 31, 2008, Simo Motor's unaudited net profits were about RMB 100.2 million or US$ 14.4 million.
The company revealed that it intends to use a part of the proceeds from the August 2009 public offering to finance the purchase. Harbin Electric expects the acquisition to be earnings accretive soon after the closure of the deal.
Further, Harbin Electric expects the consummation of the deal to occur in the next 25 business days, which is subject to the completion of the requisite registration of the share transfer.
Commenting on the takeover, Tianfu Yang, Harbin Electric's Chief Executive, said, "We further believe that the acquisition of Simo Motor will result in significant synergies, thanks to economies of scale in raw material purchasing, manufacturing, research & development, and management efficiency as we consolidate and streamline operations on both sides."
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. served as advisers for matters concerning the acquisition and evaluation.
HRBN closed Monday's regular trading session at $16.52 on the NASDAQ.
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