Gelonghui Enterprise Holdings (02195.HK) issued an announcement on March 22, 2024. On March 22, 2024, the seller (i.e. Ms. Leung Yiman), the target company (i.e. Yongwang Holdings Limited) and the buyer (Keybase Assets Limited, a direct wholly-owned subsidiary of the company) entered into a sales agreement. According to this, the seller conditionally agreed to sell the sales shares (i.e. approximately 100% of the target company's shares) at a total cost of HK$22 million.
According to the agreement, the total cost of the acquisition is HK$22 million, which must be paid by allocating and issuing approximately 175 million worth shares to the seller or its nominee upon completion or on any other date separately agreed by the contracting party in writing. The issue price for each share was HK$0.126, a discount of approximately 16.0% per share from the closing price of HK$0.150 reported on the Stock Exchange on March 22 (that is, the date of the sale agreement).
The target company is a company incorporated in Hong Kong whose main business activity is investment holding. The target company holds all of the shares of subsidiary A and subsidiary B, respectively. Subsidiary A (i.e. Gangshao (Hong Kong) Construction Engineering Co., Ltd.) is mainly engaged in providing contract services for RMAA projects in Hong Kong. Subsidiary B (i.e. Zhuoyi Building Materials Co., Ltd.) is mainly engaged in the distribution of construction materials in Hong Kong.
The announcement stated that the Group is a Hong Kong contractor specializing in repair, maintenance, alteration and addition (“RMAA”) projects. The Group is currently taking active steps to expand its business operations to maximize shareholder returns. The Group believes that horizontal integration through the acquisition of contractors that specialize in the Group's main RMAA projects will further enhance the Group's ability to carry out RMAA projects and its competitiveness in bidding for potential projects. The Group also believes that vertical integration through the acquisition of the upstream construction materials distribution business will diversify the Group's revenue sources and improve the resilience of its supply chain to maximize the benefits of potential cross-selling synergy in the RMAA engineering value chain.