|By ACN Newswire||
|October 8, 2013 12:17 AM EDT||
Self-Owned Cigarette Brand in the PRC
Hong Kong, Oct 8, 2013 - (ACN Newswire) - Celebrate International Holdings Limited ("Celebrate International" or the "Group;" stock code: 8212) announced that it had entered into a substantial Acquisition Agreement with Lucky Praise Limited (the "Seller") pursuant to which the Group has agreed to acquire the entire issued share capital of Lakezone Limited ("Lakezone") and its subsidiary, Quanqiutong Tobacco Company Limited (the "Target Group"), at a total consideration of HK$500 million. The Target Group operates the cigarette manufacturing and distribution business under the brand name "Quanqiutong." The Consideration shall be satisfied by way of cash, Consideration Shares and a Promissory Note.
About the Acquisition Agreement and Consideration
The total consideration of the Proposed Acquisition of HK$500 million will be satisfied by HK$40 million in cash; and HK$374,766,600 (subject to downward adjustment, if any) in a Promissory Note at an annual rate of 6% due on the third anniversary of the date of issue. The remaining HK$85,233,400 will be paid in 85,233,400 Consideration Shares with an initial conversion price of HK$1.0. This price represents a premium of approximately 7.53% compared to the average closing price of HK$0.93 for the last five consecutive days, and a premium of approximately 8.7% compared to the average closing price of HK$0.92 for the last 10 consecutive trading days, inclusive of the last trading day on 7 October 2013. The related Consideration Shares represent approximately 11.11% of the existing issued share capital of the Group and approximately 10% of the issued share capital as enlarged by the allotment and issue of the Consideration Shares.
Upon the Acquisition, the Seller guarantees that the 2014 and 2015 aggregate net profit shall not be less than HK$150,000,000. In the event that the aggregate net profit is less than the agreed amount, the Seller shall indemnify and compensate the Buyer any such shortfall on a dollar-for-dollar basis.
Ms Leung Wai Kuen, Executive Director of Celebrate International said, "The Board has been looking for opportunities and evaluating investment which are beneficial to the long term development of the Group and offer steady growth in order to enhance shareholders' value. The Board is optimistic about the prospects of the tobacco industry in the PRC and considers the Acquisition as a lucrative investment opportunity. We believe that, after the acquisition, the Group would then become the first Hong Kong-listed company engaging in cigarette manufacturing and also the first Hong Kong enterprise to operate a self-owned cigarette brand. In the long run, the Group expects to rapidly broaden its income source by entering the cigarette business."
About the Target Group
The Target Group principally engages in cigarette manufacturing and distribution and owns the trademark "Quanqiutong" registered in the PRC.
Pursuant to the Agreement, completion of the reorganisation is a condition precedent to completion of the Acquisition. Mr Wang Min, the founder, owns 96% of Quanqiutong, possesses 20 years of experience in the tobacco industry and has established a solid business network in the region. Upon completion of the reorganisation, Lakezone is to become the sole beneficial owner of Quanqiutong and Quanqiutong will own the trademarks "Quanqiutong" registered in the PRC (under Category 34 - Tobaccos). Mr Wang has promised to undertake the management of the tobacco business of the Target Group.
Ms Leung continued, "According to Euromonitor International Limited, the PRC accounts for more than one-third of the global smoking population, the largest number of smokers in the world in 2012. The PRC is also the largest cigarette manufacturer in the world, with more than 40% of the global production volume in 2012. The overall tobacco market in the PRC has registered steady growth in sales volume during recent years. The industry is expected to record steady growth in the coming years."
The proposed acquisition constitutes a very substantial acquisition and a connected transaction under the listing rules of the Stock Exchange of Hong Kong Limited (HKSE). Celebrate International will seek approval of its stockholders for the allotment and issue of the Consideration Shares at the Special General Meeting.
Strategic Financial Relations Limited
Tel: (852) 2864 4829
Tel: (852) 2864 4816
Tel: (852) 2864 4833
Fax: +852 2527 1196 / 2111 9030
Source: Celebrate International Holdings Limited
Copyright 2013 ACN Newswire. All rights reserved.