Century Huatong acquired 13.5 billion yuan in assets to boost the game industry

After nearly a year of suspension, Century Huatong released a major asset reorganization plan on the evening of November 30, planning to acquire nearly 13.5 billion yuan in game assets in one fell swoop, further consolidating its dual main business development model of traditional business and emerging game business in parallel.

Specifically, this time the company plans to purchase 100% equity of each of China Mobile Mobile Technology, Jingyao International, Huacong International, Huayu International and Diandian Beijing by issuing shares and paying cash to the counterparty, as well as purchasing 40% equity of Diandian Cayman through overseas subsidiaries. Among them, Jingyao International, Huacong International and Huayu International jointly hold a 60% stake in Diandian Cayman. The transaction considerations for each of China Mobile Games, Diandian Cayman and Diandian Beijing were 6.524 billion yuan, 6.839 billion yuan and 100 million yuan respectively.

At the same time, the company plans to issue shares to no more than 10 specific objects and raise matching funds, with a total amount of no more than 11.033 billion yuan, which will be used to pay the cash consideration and fundraising projects of this transaction. Among them, Yao Quru Investment controlled by the company's actual controllers Wang Miaotong and Wang Yifeng will subscribe for 4.1 billion yuan. The price of the issued shares for acquiring assets and supporting fundraising is both 11.45 yuan/share.

According to the plan, China Mobile Mobile Technology was established on October 14, 2015. It is a specially established entity for this transaction. It holds 100% equity of CMGE Cayman and 100% equity of Shenzhen Lanyue, which is controlled by the CMGE Cayman Agreement. The operating entities of this transaction are CMGE Cayman, which was originally listed in the United States and completed privatization and delisting, and its subsidiaries controlled through equity or agreement.

As a leading mobile game developer and publisher in China, China Mobile Games is mainly engaged in the development, distribution and operation of mobile game products, and is committed to providing high-quality mobile games to mobile game players. According to reports, China Mobile Games has launched a number of self-developed games with a monthly turnover of more than 10 million, such as "Regal Jin Sanshun" and "The True Character of Heroes". In the first quarter of 2015, the mobile game distribution business accounted for 20.1% of the market share of mobile game publishers in China on a rolling basis. In recent years, China Mobile Games has successfully distributed dozens of high-quality games with monthly sales of more than 10 million, such as "Enhanced Power of the Three Kingdoms","Decisive Battle in Shacheng","Monster Island","Superhero" and "The Legend of the New Sword and Fairy".

Data shows that the operating income of China Mobile Mobile Technology in 2013, 2014 and January to October 2015 was 365 million yuan, 1.127 billion yuan, and 1.189 billion yuan respectively, and the net profit was 5.8755 million yuan, 101.5253 million yuan, and-323.8057 million yuan respectively. The company said that the net profit in the proforma consolidated statement of Mobile Mobile Technology from January to October 2015 dropped significantly compared with 2014, mainly due to impairment testing on its goodwill generated due to business combinations in the previous period.

In addition, the targets of this transaction, Jingyao International, Huacong International, and Huayu International were also established specifically for this transaction. Except for holding a total of 60% equity in Diandian Cayman, they have no substantive operating assets or businesses. The operating entities of this transaction are Diandian Cayman and Diandian Interactive (Beijing) Technology Co., Ltd.

It is reported that Diandian Interactive's main business is the research and development, distribution and operation of web games and mobile games. It is a leading international game company integrating research and development, distribution and operation. Its products are aimed at the global game market. Currently, Diandian Interactive is one of the most important analog game companies on Facebook except Zynga(Global social game giant). The main self-developed games that have been officially operated are Family Farm, Family Farm Seaside, Royal Story, etc., all of which are the world's leading analog business social games. Data shows that in 2013, 2014 and January to October 2015, Diandian Beijing achieved net profits of 4.0359 million yuan, 6.2092 million yuan, and 5.1717 million yuan respectively; Diandian Cayman achieved net profits of 27.9363 million US dollars, 40.0286 million US dollars, and 38.1913 million US dollars respectively.

The other party of this transaction promised that China Mobile Mobile Technology's net profit attributable to shareholders of the parent company in 2016, 2017 and 2018 will not be less than 400 million yuan, 530 million yuan and 680 million yuan respectively; Diandian Cayman's net profit will be no less than 79.83 million US dollars, 108.41 million US dollars and 128.13 million US dollars respectively; Diandian Beijing's net profit will be no less than 7.46 million yuan, 10.13 million yuan and 11.97 million yuan respectively.

Prior to this transaction, the listed company was mainly engaged in the research and development, manufacturing and sales of various auto parts and related molds, as well as the development and operation of online games. Through this transaction, the listed company will further consolidate its dual main business development model of parallel traditional business and emerging game business, and clarify the company's strategic layout for continuing to make efforts in the rapidly growing online game business. Century Huatong said that after the transaction is completed, the listed company will become a truly multinational online game group, further expand its market share and increase the revenue and profits of the game business.

[Original Announcement]

Century Huatong: Issuing shares and paying cash to purchase assets and raising matching funds and related party transactions

Century Huatong: Guotai Junan Securities Co., Ltd.'s report on the company's issuing shares and paying cash to purchase assets and raising matching funds and related party transactions Independent financial consultant verification opinion

Editor: vian