Today, China 3C Group announced that it has agreed to acquire 100% of Jinhua Baofa Logistic Ltd. (“Jinhua”), a well-known logistic company in Eastern China. The agreed amount for this transaction is RMB 120 million (approximately $17.4 million). The company anticipates completing the acquisition by March 31, 2009.
Jinhua was founded in 2001 and currently employs about 350 people. With 280 customers and a fleet of more than 70 trucks, the company had sales of RMB 54.2 million (approximately $7.85 million), net income of RMB 11.7 million (approximately $1.69 million), and gross margin of 32.2% for the nine months ended September 30, 2008.
Mr. Zhenggang Wang, CEO of China 3C Group, stated, “We are extremely excited about the acquisition of Jinhua and believe this acquisition can increase the competitiveness of China 3C group within the existing regions we conduct business and potentially beyond. China 3C’s logistical network will be more complete through the combination of Jinhua’s transportation network with China 3C’s existing distribution network. The addition of Jinhua can result in faster, safer and more reliable logistic services as well as provide China 3C with annual logistic expense savings.”
“While Jinhua has a strong presence in Eastern China, we also believe that it can assist 3C in developing a logistics platform that can allow us to expand into other major geographic regions in China. We are pleased to acquire a business with gross margins that are roughly double that of our current operations and believe that Jinhua can add at least $10 million in revenue and $2 million in net income to our business annually going forward,” he continued.
Mr. Hongfei Guo, CEO of Jinhua Baofa Logistic Ltd, commented, “We are very excited to join China 3C Group and believe China 3C can further diversify Jinhua’s customer base, provide strong managerial support and add financial strength to our business, enabling us to expand China 3C’s growth more quickly while also allowing us to pursue additional growth opportunities with other new and existing customers.”
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