On September 13, Caixin Media reported that recently there has been an increase in the number of cases where listed companies intend to acquire assets in cash, including Heilongjiang Interchina Water Treatment Co., Ltd. (600187.SH) intends to indirectly acquire Beijing Huiyuan by paying cash, Hanjia Design Group (300746.SZ) intends to acquire 51% of Futubull Technology Co., Ltd. in cash, and Yongda Co., Ltd. (001239.SZ) intends to acquire 51% of Jiangsu Jinyuan High-end Equipment Co., Ltd. in cash.

Tonight, Harson Trading (China) Co. (603958.SH) announced that the major asset restructuring it had previously prepared has been changed to the cash acquisition of assets. The company originally planned to purchase 87% of the equity of Suzhou Langkes Precision Hardware Co., Ltd., 90% of the equity of Jiangsu Langxun Industrial Intelligent Equipment Co., Ltd., and 23.0769% of the share of Suzhou Yeyu Enterprise Management Partnership (Limited Partnership) by issuing shares and raising matching funds. It has now been directly adjusted to acquire them by paying 0.358 billion yuan in cash.

Cash acquisition reduces the proportion of equity acquisition and the number of transaction targets, which are '45% equity of Suzhou Langkes and 55.2% equity of Jiangsu Langxun'. After this cash acquisition of assets is completed, Harson Trading (China) Co. will control 55% equity of Suzhou Langkes and 65.2% equity of Jiangsu Langxun.

Regarding the reason for the change, Harson Trading (China) Co. stated that it is because of confidence in the future development prospects of precision metal structural parts and related equipment business of Suzhou Langkes and Jiangsu Langxun, as well as recognition of the target company. It uses the word 'as soon as possible' twice: the company hopes to integrate this business into the listed company system as soon as possible, and to complete the integration work of the target company as soon as possible, to support the industrial transformation and layout of the listed company.

Harson Trading (China) Co. stated that after this acquisition is completed, the company will obtain control of the target company and form a diversified layout of 'medium-high-end footwear + precision metal structural parts and related equipment', thereby improving the overall operating performance and profitability of the company.

In the first half of this year, Harson Trading (China) Co. was still in a loss state, with a net income of -11.85 million yuan. Caixin Media reporters noticed that as of June 30, 2024, the company had cash and cash equivalents of 0.1227 billion yuan and trading financial assets of 0.2261 billion yuan. The company mentioned in the announcement that this transaction will be fully paid in cash, including self-owned funds and bank loans, and will not involve the issuance of shares and the raising of matching funds.

According to the audit report, Suzhou Langkes had a net income of 47.471 million yuan in 2023 and 10.7896 million yuan in January-March 2024; Jiangsu Langxun had a net income of 14.359 million yuan in 2023 and -0.0179 million yuan in January-March 2024.

Harson Trading(China)Co., has signed a profit forecast compensation agreement with the counterparty of the cash acquisition of assets in this transaction. The counterparty undertakes that the net income attributable to the owners of the parent company in the consolidated financial statements of the years 2024, 2025, and 2026 for Suzhou Langke, will not be less than 51.4 million, 56.92 million, and 6312 thousand yuan, respectively. The net income attributable to the owners of the parent company in the consolidated financial statements of the years 2024, 2025, and 2026 for Jiangsu Langxun (subject to the profit and loss after deducting the investment in Suzhou Langke in the consolidated financial statements) will not be less than 8.28 million, 10.4 million, and 1130 thousand yuan, respectively.

Harson Trading(China)Co., mentioned in the transaction reason that current policies encourage companies to upgrade industries through mergers and acquisitions to improve the quality of listed companies. This transaction will help the listed company integrate high-quality resources, optimize industrial layout and asset structure, increase revenue scale and profit level, and align with the direction encouraged by the policy.