Sanqi Mutual Entertainment 2.565 billion yuan acquired three companies to increase the in-depth layout of the game industry and pan-entertainment

Sanqi Mutual Entertainment, which has been suspended for nearly five months, finally announced a major asset reorganization plan on the evening of August 1. The company plans to acquire 100% equity of Zhonghui Film and Television, 68.43% equity of Shanghai Mokun and 49% equity of Jiangsu Zhiming, at a price of 1.2 billion yuan respectively., 1.11 billion yuan and 255 million yuan further improve the company's IP-based cultural and entertainment industry chain operation capabilities.

Original title: Sanqi Mutual Entertainment has acquired more than 2.5 billion yuan in assets of three major games and added to its pan-entertainment strategy

. Sanqi Mutual Entertainment has been suspended for nearly five months. It finally announced a major asset reorganization plan on the evening of August 1. The company plans to acquire 100% equity of Zhonghui Film and Television, Shanghai Mokun 68.43% equity and Jiangsu Zhiming 49% equity were valued at 1.2 billion yuan, 1.11 billion yuan and 255 million yuan respectively, further improving the company's IP-based cultural and entertainment industry chain operation capabilities. In addition, Sanqi Mutual Entertainment also plans to issue shares to no more than 10 specific targets to raise no more than 1.217 billion yuan. The company's shares continued to be suspended.

The announcement shows that the total consideration for the three asset transactions to be purchased by Sanqi Mutual Entertainment is 2.565 billion yuan, of which 898 million yuan will be paid in cash, and the remaining 1.667 billion yuan will be paid in the form of issuing shares. The price of shares issued is 16.63 yuan/share, and a total of approximately 100 million shares were issued. Regarding the funds to be raised this time, Sanqi Mutual Entertainment will use 898 million yuan of them to pay the cash consideration for this transaction, and will use another 110 million yuan for the expansion of Zhonghui Film and Television IP resource library and the production of film and television dramas. The remaining 39.32 million yuan will be used to pay the fees of intermediaries related to this transaction.

Overall, Sanqi Mutual Entertainment plans to further increase its game industry through this acquisition. Since the acquisition of Shanghai Sanqi in 2014, Sanqi Mutual Entertainment has adjusted its business direction. Its main business has extended from the manufacturing and sales of single automotive plastic fuel tanks to the operation of the entire industry chain of games.

At the product distribution level, Sanqi Mutual Entertainment has obtained the rights to operate multiple platforms such as Jinshan Cheetah Game Center, 2345 Game Center, and Yilewan, building certain brand barriers and bargaining power. In the field of mobile games, the company has successfully released a variety of phenomenon-level mobile games, including "The Blade of the Blue Wings","The Sky Heroes","Light of Adventure","Journey to the West", and "Dream Journey to the West" through exclusive and intermodal methods. Its overseas game publishing business has also made certain breakthroughs, and its 37games international platform has covered more than 70 countries.

At the level of product research and development, Sanqi Mutual Entertainment has established strategic cooperative relationships with many domestic front-line R & D companies such as Molin, Ruizhan Network, and Youzu Network.

In addition, Sanqi Mutual Entertainment has also begun to carry out relevant layout around the pan-entertainment ecological industry chain with games as the core. Through mergers and acquisitions, it has integrated a large number of games, animation, VR content and product resources, and initially established the prototype of the pan-entertainment industry chain.

Corresponding to the existing layout of Sanqi Mutual Entertainment's early business, the three companies the company plans to acquire this time have their own characteristics.

Specifically, Zhonghui Film and Television is a literary IP exploration, trading, development and operation company. It is committed to building an Internet cultural works platform with literary IP as the entrance, and has reserved more than 50 well-known IPs including "Journey" and "King of Heaven". The company achieved total operating income of 29.077 million yuan, 67.1772 million yuan and 14.2058 million yuan in 2014, 2015 and January to April 2016 respectively; net profits of 3.984 million yuan, 13.819 million yuan and-1.368 million yuan respectively in the same period.

Mokun Technology is a high-quality online game developer. The types of online games developed include high-quality web games and mobile online games. Mokun Technology has also stocked a variety of high-quality game products under development and has reached stable cooperative relationships with Internet companies such as Shenzhen Tencent. During the reporting period, Mokun Technology launched its first 3D ARPG action mobile game masterpiece "Unparalleled for All", which was operated exclusively by Shenzhen Tencent. It continued to be stable in the top ten best-selling list the month it was launched. Mokun Technology achieved operating income of 146,500 yuan, 13.084 million yuan and 67.7271 million yuan in 2014, 2015 and January to April 2016 respectively; achieved net profits of-29.653 million yuan, -33.1477 million yuan and 48.1816 million yuan respectively.

Zhiming Network is an online game agency operator. Its agents operate phenomenal online game products such as "Legendary Overlord" and "Fantasy Westward Journey", and has established a stable cooperative relationship with Tencent Platform. After the completion of this acquisition, Zhiming Network will become a wholly-owned subsidiary of Sanqi Mutual Entertainment. Zhiming Network achieved total operating income of 100,000 yuan, 275 million yuan and 139 million yuan in 2014, 2015 and January to April 2016 respectively; net profits of-44,300 yuan, 996,400 yuan and 12.3636 million yuan respectively in the same period.

Sanqi Mutual Entertainment said:

Zhonghui Film and Television's IP development and operation capabilities will help the company increase traffic coverage, user conversion rate and payment frequency;

Mokun Technology's high-quality game research and development capabilities can help the company increase users 'paying propensity;

Zhiming Network's distribution capabilities can help the company increase traffic coverage and user conversion rate.

Overall, this transaction will effectively strengthen the company's core competitiveness, namely entertainment product development, distribution and operation capabilities. At the same time, it will further improve the company's IP-based cultural and entertainment industry chain operation capabilities and deepen the "pan-entertainment" strategy.

According to the information disclosed in the announcement, the evaluation value-added rates of Zhonghui Film and Television, Mokun Technology and Zhiming Network are 583.18%, 2108.66% and 2335.9% respectively. The counterparty promised that the net profit attributable to shareholders of the parent company after deducting non-profits from the 2016 - 2019 consolidated statements of Zhonghui Film and Television will not be less than 30 million yuan, 90 million yuan, 126 million yuan and 170 million yuan respectively. The committed performance of Mokun Technology is that the net profit attributable to shareholders of the parent company after deduction from the 2016 - 2018 consolidated statements shall not be less than 120 million yuan, 150 million yuan and 188 million yuan respectively. Zhiming Network's net profit attributable to shareholders of the parent company after deduction from the 2016 - 2018 consolidated statements shall not be less than 40 million yuan, 50 million yuan, and 62.5 million yuan respectively.

Editor: Nancy