Alibaba.com Acquires Chinese Web Solutions Provider
Alibaba.com Limited, 12/28/09
Chinese B2B e-commerce firm Alibaba.com (1688.HK) has entered into a share purchase agreement to acquire China Civilink (Cayman), which operates in China as HiChina Web Solutions, for a total consideration of RMB 539.98 mln (USD 79.06 mln) in cash upon completion of two phases.
According to the terms of the deal, Alibaba.com will acquire 85% of HiChina for a cash consideration of RMB 435.42 mln (USD 63.75 mln) with an additional 14.67% retained by the founders of HiChina, who will continue to be involved in daily management of the company. Dependent upon HiChina reaching certain performance targets, the founders of HiChina have an option to sell their 14.67% equity interest in HiChina to Alibaba.com over the next three years for an additional consideration of RMB 104.56 mln (USD 15.31 mln) in cash.
To further incentivize the founders and key employees to continue contributing to the success of HiChina after the acquisition, Alibaba.com has also agreed, among other things, to transfer certain shares of HiChina held by Alibaba.com to the management and key employees of HiChina pursuant to earn-in arrangements, subject to their meeting certain post-completion performance milestones during 2011 to 2015. If all the performance milestones are 100 percent met and not exceeded, the number of Earn-in Shares to be transferred over a five-year period will amount to a total of a 15% equity interest in HiChina. If any or all of the performance milestones are exceeded, the percentage of equity interest to be transferred will correspondingly increase, subject to certain limits and restrictions.
The acquisition is expected to close by the end of the year. After the closing, HiChina, with more than 550 employees, will become a subsidiary of Alibaba.com and will retain its own brand name and operations. HiChina’s product offering will become part of Alibaba.com’s Information Technology Business Unit (ITBU), which is focused on providing small businesses with a comprehensive solution for hardware, software and Internet-based services as well as IT maintenance.
Keywords: B2B e-commerce Internet Alibaba HiChina 1688.HK M&A
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