Feile Audio acquires Shen'an Group to extend the LED lighting industry chain

Feile Audio (600651) today announced a restructuring draft and finalized the acquisition of Beijing Shen'an Group. The company will also realize the integration of the lighting industry. The "Report" shows that Feile Audio plans to acquire 100% of the equity of Shen'an Group by issuing shares and paying cash. With May 31, 2014 as the transaction base date, Shen'an Group's final price is 1.59 billion yuan. Feile Audio issued shares at a consideration of 1.149 billion yuan, a ratio of 72.25%; it paid a cash consideration of 441 million yuan, a ratio of 27.75%. Feile Audio is targeting a total of 246 million shares for issuance this time, of which the target company's shareholder Shen'an United subscribed for 168 million shares with assets, and the major shareholder Instrument Electronics (600602) Group and the company's management holding company subscribed for 78 million shares in cash, raising supporting funds of 530 million yuan. Data shows that Beijing Shen'an Group is a comprehensive enterprise integrating the design, research and development, production and sales of high-brightness LED lighting products, as well as the contracting and construction of outdoor lighting, landscape lighting, indoor lighting and other lighting projects. The company is committed to providing customers with comprehensive LED lighting solutions. The group's operating income from January to May 2013 and 2014 were 419 million yuan and 393 million yuan respectively, and its net profits were 71 million yuan and 59 million yuan respectively. The business developed rapidly. The predicted net profits in 2014, 2015 and 2016 are 136 million yuan, 191 million yuan and 191 million yuan respectively.271 million yuan. Based on the total share capital of Feile Audio after this issuance, the increased earnings per share are 0.14 yuan, 0.19 yuan and 0.27 yuan respectively. Feile Audio's pro forma profit forecast shows that by 2015, the listed company's operating income will reach 3.852 billion yuan, net profit will reach 285 million yuan, and earnings per share will reach 0.29 yuan, thus ranking among the high-quality LED lighting listed companies with strong profitability. As a large state-owned green lighting listed company, the lighting industry in which Feile Audio operates is undergoing a period of transformation. Against this background, Feile Audio hopes to accelerate the development of the green lighting industry with a positive and innovative spirit by grasping market directions and opportunities. As a result, the company has proposed the goal of "concentrating its superior resources to enter the LED application-side lighting market." The Shen'an Group acquired by Feile Audio this time is a company that focuses on lighting engineering and drives the sales of LED lighting products. It has already occupied an important market position in the LED application-side lighting market, Feile Audio's strategic development direction, and has accumulated rich customer resources and application experience. Therefore, this acquisition is expected to open up and extend the industrial chain of LED lighting fixtures and application-side lighting engineering markets, achieving a powerful alliance. It is worth mentioning that according to the final plan, the shareholding ratio of Feilo Audio's state-owned shareholder Instrument Electronics Group increased to 21.85% after this reorganization, and the shareholding ratio of private counterparty Shen'an United was 17.10%. The shareholding ratio difference between the largest state-owned shareholder and the second largest private shareholderis 4.75%. According to the stable equity relationship agreement signed by both parties, INESA Group can unilaterally increase its holdings by 5% of the shares at its option, including the 3% shares that Shen'an United will lift from the ban 12 months later and transfer to IED Electronics Group at its option. If the above arrangement is fully implemented, the difference in shareholding ratio between the two can be expanded to a maximum of 12.75%. As a pioneer case of mixed owner reform in Shanghai’s state-owned assets system that combines state-owned enterprises with private enterprises, INESA Group has introduced private economic capital, improved operating performance, and strengthened corporate governance while effectively ensuring and stabilizing the state-owned holding position. The plan can be described as ingenious.