Gelonghui, Feb. 21 | Weicheng International (01002.HK) announced that on February 21, 2024, Weicheng Holdings, a direct wholly-owned subsidiary of the company, entered into a trading agreement with B&E. According to this, Weicheng Holdings has agreed to the acquisition, and B&E has conditionally agreed to sell shares (that is, the target company VS Industry Vietnam Joint Stock Company has issued approximately 43.29% of the issued share capital) at a cost of HK$69 million. On the completion date, compensation will be paid in the form of (i) cash payment of HK$12 million; and (ii) the allocation of HK$0.28 per share at the issue price and payment of consideration shares.
Completion will be implemented on the 7th business day (or any other date that may be agreed in writing between Weicheng Holdings and B&E) after all prerequisites have been met (or effectively waived).
The target group's product supply categories mainly include the production of plastic injection parts, assembly and/or manufacture of office printers, tissue dispensers, tableware dispensers, cup dispensers, portable toilets and medical products.
It is anticipated that the acquisition will expand the Group's customer base and product supply scope to become an expanded group (that is, the existing group and target group after the acquisition, collectively referred to as the “expanded group”). The acquisition can also expand the Group's business scope and open up the Vietnamese manufacturing market, thereby enjoying the lower labor costs and good development opportunities enjoyed by the target group and other Vietnamese manufacturers, and diversified the group's business market.
After the acquisition is completed, it is expected that the expanded group will have a broader customer base, as well as domestic and international customers. On the other hand, the expanded group will also have a wider range of product supply, and the expanded group can use its expanded product supply categories to serve more customers or potential customers with different product needs.
Furthermore, Viet Nam has become a major beneficiary of manufacturers' efforts to “reduce” the risk of geopolitical tension, and has enjoyed foreign trade opportunities through various free trade agreements with various countries. Compared to China, labor costs in Vietnam are also lower. After the acquisition is completed, the expanded group will not only have a wider customer base and product supply range, but will also be able to obtain favorable business opportunities enjoyed by Vietnamese manufacturers, as well as lower labor costs compared to China.
As a result of the expansion, the Group will have two production bases with increased production capacity to meet the needs of different customers or potential customers. It is believed that all of the above can promote the business development of the expanded Group, attract and acquire customers and potential customers with different product requirements, and who want to diversify their supply chains, reduce overall production costs, or “reduce” the risk of geopolitical tension.