On June 24th, 2024, the buyer (the company's indirect subsidiary, which holds 85% and 15% of the equity by Beijing Enterprises Urban Resources and Mr. Xiong's wholly-owned subsidiary, respectively) and the seller signed a purchase agreement for the exchangeable bonds for HKD 29.5 million. After completion, the buyer will become the holder of exchangeable bonds, and will thus have the right to exchange all the issued shares of Target Company CM Services Limited. Target Company will become a subsidiary of the company and its financial performance will be incorporated into the group's financial statements.
The purpose of acquiring exchangeable bonds is to acquire all the shares of Target Company. The directors believe that the acquisition is intended to achieve rapid growth in the Hong Kong environmental sanitation service market share and help the Group quickly accumulate operational experience of similar projects overseas, which is an important measure for the Group to achieve leapfrog development. The directors also believe that the acquisition will achieve the synergy effect of 1+1>2 between the Group's Hong Kong business and mainland China business, with synergy effects in management, operation, finance, and market strength. The Group will use its market expansion capabilities in Shenzhen, adjacent to Hong Kong, to help the Group further enhance its Hong Kong business.
Target Company is a well-established environmental and sanitation service provider in Hong Kong, providing services such as: (a) cleaning services; (b) pest control services; (c) waste management and recycling services.
The directors also believe that the acquisition will achieve the synergy effect of 1+1>2 between the Group's Hong Kong business and mainland China business, with synergy effects in management, operation, finance, and market strength. The Group will use its market expansion capabilities in Shenzhen, adjacent to Hong Kong, to help the Group further enhance its Hong Kong business.
The directors believe that, in addition to expanding the Group's market size, the acquisition will also achieve complementary effects in technology. The Group can introduce advanced mainland China technology to Hong Kong, and can also apply Hong Kong's more stringent regulatory system to mainland China business. At the same time, the integration of commercial reputation and brand awareness will also bring the Group a more solid market position and a more perfect commercial image, which is beneficial to the Group's long-term sustainable development.