China Security & Surveillance Technology, a provider of digital surveillance technology in China, says it plans to acquire two Chinese security and surveillance companies.

Non-binding letters of intent have previously been signed with Shenzhen Hongtianzhi Electronics Company and HighEasy Electronic Technology. Hongtianzhi is currently one of China's top security camera manufacturers and HiEasy is based in Wuhan and will provide China Security with advanced compression technology to enhance the company's product offerings and user functionality by facilitating video and audio transmissions over telecommunications infrastructure networks.

The acquisitions are expected to bolster China Security's presence in the domestic market by making it one of the only vertically integrated providers, while also facilitating thecompany's planned expansion into new international markets. Hongtianzhi is expected to record approximately US$12 million in revenues and $3 million in net income for 2006.

The company's anagement anticipates revenues from the Hongtianzhi business to grow to approximately US$20 million for 2007. HiEasy is expected to record approximately US$3.2 million in revenues and $0.65 million in net income for 2006. Management expects revenues relating to the HighEasy business to grow to approximately US$5 million in 2007.

The purchase price for HiEasy and Hongtianzhi is expected to be approximately US$10 million and US$30 million, respectively, with half of the consideration in cash and half in restricted common stock.

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