China-based Acorn International (ATV) announced the completion of its acquisition of Yiyang Yukang Communication Equipment Company Limited, a domestic communication equipment producer and distributor in China.
The deal was closed on December 24, 2008, pursuant to the terms of a definitive agreement entered into on December 18, 2008. Acorn issued a statement saying the acquisition will provide it a strong pipeline of mid-to-high end, differentiated and branded mobile handset products as well as strengthen Acorn's existing distribution capability in China.
Under the agreement, Acorn has acquired Yiyang Yukang for consideration of USD6.7 million in cash and 2,564,103 of its ordinary shares valued at a price of USD3.12 per share, and shall pay up to an additional three earn-out payments equivalent to the maximum amount of USD44.1 million in a combination of cash and ordinary shares, contingent on Yiyang Yukang meeting certain earnings targets in 2008, 2009 and 2010 for each earn-out payment. Additionally, Yiyang Yukang shall cause its board of directors to resign, and Acorn shall have the right to appoint a majority of new board members, with the remaining to be appointed by Yiyang Yukang.