The Hartcourt Companies, Inc., announced recently that it has received all governmental approvals and has completed the acquisition of WenZhou ZhongNan Computer Group of Companies (ZhongNan) as per the signed agreement dated June 28th 2003.
Since Hartcourt owns 51 percent of all outstanding shares of ZhongNan, it will be able to consolidate 100 percent of ZhongNan revenue starting the fourth quarter of 2003. The purchase price for the 51 percent acquisition is CNY41.34 Million (US$5 Million) payable in 8,415,370 restricted common shares of Hartcourt priced at US$0.5955 per share.
ZhongNan, founded in 1992, has 202 employees. It owns distribution warehouses and operates 21 retail stores completed with after sales service centers in WenZhou city and Zhejiang Province which boasts one of China's highest income-per-capita. The stores provide customers with latest computer hardware, software, accessories, technical services and digital products.
ZhongNan is the fourth acquisition of Hartcourt in the IT product distribution and retail businesses. In 2002, the combined revenue of the 4 acquired entities was CNY$1,493 Million (US$181 Million) and the net profit was CNY$25 Million (US$3.1 Million).
Mr. Hu JianGuo, President of ZhongNan Computer Group, comments, "Now we are part of the Hartcourt IT distribution and retail network, we shall work closely with HuaQing, NewHuaSun and GuoWei to improve our profit margin, market coverage and overall competitiveness. Our goal is to double the current net profit margin to about 3 percent, more in line with our American and European counterparts. As more IT distribution companies are joining the Hartcourt network, the synergy and combined leverage will make the profit increase more feasible."