Hydropower Equipment Firm Takes 38% Share in 2345.com
Shenzhen Stock Exchange, 8/12/13
Zhejiang-based hydropower equipment manufacturer Fuchunjiang Hydropower Equipment (002266.SZ) has announced that it will purchase a 38% stake in Shanghai Er San Si Wu Network Technology ("2345"), operator of online web directory 2345.com, along with a number of other 2345-branded web products.
Fuchunjiang Hydropower and its controlling shareholder, Sun Yi, will invest in 2345 in an all cash offering. Fuchunjiang Hydropower's investment will not exceed RMB 650 mln, while Sun's investment will be no less than RMB 11 mln. Following the investment, Fuchunjiang Hydropower and Sun Yi will control a joint 38% stake in 2345, identical to the stake held by 2345 Chairman Pang Shengdong.
The deal stipulates that 2345 net profit in 2013, 2014, and 2015 much reach RMB 80 mln, RMB 120 mln, and RMB 150 mln, respectively. If combined net profit over the three years is less than RMB 350 mln, Pang will make up the difference in cash paid to Fuchunjiang Hydropower and Sun.
In 2012, 2345 had revenues of RMB 139 mln, and net profit of RMB 15.9 mln. H1 2013 revenues were RMB 210 mln, and net profit was RMB 33.1 mln.
2345's subsidiaries include online web directory 2345.com, IE-based browser 2345 Smart Browser, software download site Duote.com, compression software HaoZip, and photo viewing and editing software 2345 Kantu Wang. Of these subsidiaries, 2345.com is the company's main revenue source.
In July, 2013, 2345.com's PC user base was approximately 30 mln, ranking it third in China's online web directory services market behind rival Qihoo 360's (NYSE: QIHU) online navigation portal, and Baidu's (Nasdaq: BIDU) Hao123 online navigation portal. The combined user base of 2345 Smart Browser and 2345's "2345 Extreme Explorer" browser has passed 10 mln. HaoZip's user base exceeds 130 mln, and is one of China's most used free unzipping software products. Duote.com is China's third ranked software downloading site.
Editor's Note: For more information on this topic, please see "Rumor: Qihoo 360 Acquires Web Directory Site 2345.com," MD 6/05/13 and "Rumor: Qihoo, Baidu Compete to Acquire Web Directory 2345.com," MD 4/17/14 issues.
Keywords: 002266.SZ Fuchunjiang Hydropower Pang Shengdong Internet profit revenue online web directory 2345.com Duote.com Haozip Sun Yi users M&A browser
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