Expanding into the upstream of the optical communication industry chain! Changxin Bochuang plans to acquire over 93% of Honghui Guanglian's equity for 375 million yuan. Senior executives have densely reduced their holdings in the past three months.

Changxin Bochuang (SZ300548, stock price 165.58 RMB, market cap 48.3 billion RMB) announced on the evening of February 24th that the company signed a letter of intent for equity acquisition with Shanghai Honghui Guangtong Technology Co., Ltd. (hereinafter referred to as Honghui Guangtong), intending to acquire 93.8108% of its equity in Shanghai Honghui Guanglian Communications Technology Co., Ltd. (hereinafter referred to as Honghui Guanglian).

According to the announcement, the specific transaction amount, plan, and other details will be further negotiated based on due diligence, audit, and valuation results, and will be finalized in a formal acquisition agreement between the parties. Additionally, this proposed acquisition does not constitute a related-party transaction or a major asset restructuring and will not have a significant impact on the company’s operating performance for the current year.

Under the agreement, Changxin Bochuang shall pay a deposit of 1 million RMB to a bank account designated by Honghui Guangtong within 10 working days after signing the letter of intent. If both parties subsequently sign a formal “Share Transfer Agreement,” this deposit will automatically convert into part of the transfer price for the equity.

The seller will coordinate with other shareholders of the target company to transfer the remaining equity to Changxin Bochuang

The announcement shows that Honghui Guanglian was established on September 21, 2000, with a registered capital of 112.3 million RMB. Its registered address is No. 6, Building 2465, Hengcang Road, Malu Town, Jiading District, Shanghai. The legal representative is Huang Huiliang, and the company type is a limited liability company (natural person investment or control).

The “Daily Economic News” reporter noted that Honghui Guanglian’s business scope includes not only technical services, development, and consulting but also popular concepts in A-shares—such as sales of optical communication equipment.

Regarding ownership structure, Honghui Guanglian is held 93.8108% by Honghui Guangtong, with Xia Xiang and Du Guihua holding 3.6959% and 2.4933%, respectively. The seller (Honghui Guangtong) also promised to coordinate with other shareholders of the target company to ensure their agreement to transfer the remaining 6.1892% of shares to Changxin Bochuang, ensuring the successful acquisition of 100% of the target company’s equity.

Source of the image: Changxin Bochuang announcement

According to the announcement, Honghui Guanglian’s main business involves the research, production, and sales of optical devices such as filters, spectroscopes, high-reflective films, and Z-BLOCK.

Changxin Bochuang stated in the announcement that both parties have preliminarily confirmed that the tentative transfer price for the target equity is approximately 375 million RMB (estimated based on a valuation of 400 million RMB for 100% of the target company), which is only for reference and does not constitute a price commitment or lower limit. The final transfer price will be determined through further negotiations based on audit and valuation reports.

Top executives of Changxin Bochuang reduced holdings intensively within three months before signing the letter of intent

The “Daily Economic News” reporter also observed that within four months after the letter of intent became effective, the buyer (Changxin Bochuang) was in an exclusivity period. During this time, without written consent from the other party, Changxin Bochuang could not negotiate with third parties regarding competitive assets of the target company, nor could Honghui Guangtong negotiate with third parties to transfer the target shares or assets.

Regarding the purpose and impact of this acquisition, Changxin Bochuang said that it is part of the company’s upstream layout in the optical communication industry chain. The company aims to expand its product offerings in the upstream optical device field, improve profitability and sustainable operation, and further leverage synergies, aligning with the interests of the company and all shareholders.

The signed letter of intent is only a preliminary agreement between the parties on the acquisition and does not constitute a binding share transfer agreement. The rights and obligations of all parties will be based on the final formal agreement.

Furthermore, the completion of this acquisition still depends on the results of due diligence, audit, and valuation, and may be subject to adjustments due to changes in due diligence findings and market conditions. The company must also follow relevant procedures and legal regulations, so whether the acquisition proceeds remains uncertain.

It is also worth noting that within three months before signing the letter of intent, ZHU WEI (朱伟), a shareholder holding over 5%, and his spouse WANG XIAOHONG (王晓虹) collectively reduced their holdings by 6.9153 million shares. During the same period, several senior executives, including General Manager Tang Jinkuan, Deputy General Manager Zhou Rongrong, and CFO PEH KOK THYE (彭国泰), also reduced their shares to varying degrees. The announcement states that ZHU WEI and his spouse still have disclosed but unfinished share reduction plans within the legal period and may continue to do so within compliance.

(Source: Daily Economic News)