The Hartcourt Companies, Inc., one of China's fastest growing IT distribution and retail companies, announced recently that it has signed an agreement to purchase 100% of Pengyang Computer Co., Ltd., a major notebook computer retailer and marketer based in Shanghai, China.
The purchase price for 100% of outstanding shares of Pengyang is 14.85 Million CNY (US$1.8Mil) payable in 1,530,000 restricted common shares of Hartcourt, calculated at $0.60 a share, and 6.2% of ownership of Huaqing. After the acquisition, Pengyang will be fully integrated into the operations of Huaqing, of which Hartcourt will continue to hold a 51% interest.
Pengyang owns and operates 12 retail stores in Shanghai area specializing in notebook computers. The company is major distributor and retailer for HP, IBM, BENQ, ASUS and Compower. The stores also carry notebooks and accessories of Samsung, Fujitsu, Compaq, Toshiba, and Intel. According data from IDC, China has experienced strong growth in its notebook PC market and is expected to outperform global growth rate. For the first 3 quarters of 2003, total units shipped increased 83% over the same period last year. Market potential is greatest with consumer market thanks to rising in income and urbanization. The low penetration of notebook PC in China (11% of the total PC sales comparing to 26% world-wide) and the fast industrial output would mean faster growth curve for notebook PC.
Mr. David Chen, Hartcourt's CEO and interim Chairman, comments, "Pengyang, the latest addition to the Hartcourt PC distribution network, is expected to be fully integrated into Huaqing operation from day one. With the help of other subsidiaries, Huaqing and Pengyang will expand its notebook business aggressively in 2004. Meanwhile, Hartcourt is expecting more similar transactions to fully explore our synergies."