(Yicai Global) Sept. 10 --  A-share listed ink coating developer Letong Chemical will buy Singapore-based Precision Capital, one of the world's biggest hard disk drive component makers, for CNY2.4 billion (USD350 million) to break into the data storage field, the Zhuhai, Guangdong province-based company announced yesterday. 

It plans to acquire 100 percent of Wuhan Zhongke Xinwei Information Technology via the issue and cash payments to five of its shareholders. CNY2.2 billion will be in the form of shares and CNY200 million (USD29 million) in cash. The issue price of the stock is CNY16.31 (USD2.40) per share, Letong Chemical announced yesterday.

Zhongke Xinwei is a shareholding investment company. Its real assets are the 100 percent equity of Precision Capital, which is its wholly-owned unit, the announcement said.

Zhongke Xinwei, Precision Capital and Precision Capital's original shareholder MMI Technologies signed the agreement on July 18. Zhongke Xinwei will get 100 percent of the equity of Precision Capital MMI Technologies holds for USD245 million, and will earmark USD45.13 million to add funding to Precision Capital, and buy a stake in it to the tune of USD290.13 million The transaction has not yet wrapped up.

Precision Capital's main clients are global famous HDD manufacturers of the ilk of the US Seagate Technology and Western Digital, and the latter's unit Hitachi GST, from whom it derives most of its business income. The company also provides automation equipment design, integration and maintenance services for manufacturers, public data show.

The target's existing management will stay on after the deal, and its core management will become indirect shareholders of Letong Chemical. The controlling shareholders and actual controllers will not change before and after the transaction, the announcement stated.

Letong Chemical also intends to raise matching funds from a non-public share offering by soliciting up to 10 eligible specific investors to finance the deal. The number of shares issued is not expected to exceed 20 percent of the total share capital before the issue, and the total amount of funds raised will not exceed CNY950 million, the announcement added.

Editor: Ben Armour