Chinese lighting manufacturer Tecnon (Fujian) Commercial Lighting Co Ltd plans to acquire all shares in two semiconductor companies, Upstar Technology and SCE, for about 750 million yuan ($105 million) in cash, per a recent filing with the Shenzhen Stock Exchange (SZSE).
Tecnon, which is listed on Shenzhen’s ChiNext Board, is seeking to purchase 100 per cent shares in Quanxinke Electronics Technology, Upkeen Global Investments Limited, and Fast Achieve Ventures Limited – the three entities that jointly hold all equity interest of Upstar Technology and SCE.
The buyer intends to settle the payment with corporate capital, as well as external financing from private placements and bank loans, among others, according to the filing.
Before the disclosure, Tecnon had entered into an agreement with a private equity fund managed by Shenzhen-based investment firm Green Pine Capital Partners (GPCP) and Zhuang Zhanlong, chairman and a controlling shareholder of Tecnon, to raise no more than 420 million yuan ($59 million) through private placements, showed a separate filing of May 23.
As part of the deal, GPCP had agreed to pay 240 million yuan ($34 million) for 18.14 million shares at a price of 13.23 yuan ($1.85) apiece. The filing indicated that all capital raised in the private placements would be used to finance the acquisitions.
The acquisitions are expected to be completed through four installments between 2020 and 2022.
The Fujian-based lighting manufacturer, which primarily produces lighting products used in the fields of retail, hospitality and advertising, is ramping up efforts to expand offerings into the semiconductor and advanced technology fields, as its traditional lighting business is suffering from widened losses in recent years.
The company registered revenue of 57 million yuan ($8 million) in the first quarter of 2020, down 40 per cent from the same period in 2019. It posted nearly 5 million yuan ($698,714) in net loss attributable to shareholders in the quarter, compared to a net profit of about 7 million yuan ($978,200) one year earlier, according to its latest financial results.
The acquisitions of Upstar Technology, and Shenzhen-based SCE could help Tecnon revive its business.
Upstar Technology partners with semiconductor suppliers to develop electronic components applied in smartphones, TV chips, intelligent home appliances and other consumer electronics. Meanwhile, SCE offers products, services and solutions powered by AI and Internet of Things (IoT) chips.
Established in 2002, Tecnon raised 220 million yuan ($31 million) in an initial public offering (IPO) on the ChiNext Board in May 2017.