From Sewers to Fashion: China's Leo Eyes MoKa to Leverage WeChat Marketing
Tang Shihua
/SOURCE : Yicai
From Sewers to Fashion: China's Leo Eyes MoKa to Leverage WeChat Marketing

(Yicai Global) Sept. 12 -- Pump manufacturer Leo Group is planning to acquire a majority stake in a less than three years old marketing firm while paying over 12 times its expected profits for this year as the country's thriving digital marketing business attracts another unlikely investor. 

Leo signed an equity transfer agreement, under which it will pay CNY2.3 billion (USD340.5 million) in cash for a 75 percent stake in MoKa Media, the Zhejiang province-based pipe maker said in a statement yesterday. The parties determined the target company to be valued at CNY3.1 billion while its profits are estimated to stay at CNY260 million (USD37.8 million) this year -- a number which has been audited. 

Founded in 2015, MoKa runs a self-media account with user-generated content including fashion, maternity, literature and dancing. The firm has some 280 million subscribers and it provides marketing services to some 2,500 customers in a host of sectors such as cosmetics, food, health products and entertainment.

The contract stipulates that the Suzhou-based media firm's audited annual net profit after tax must be more than CNY260 million this year, CNY360 million next year, and CNY450 million in 2020 so that Leo will buy the remainder of shares within six months after the release of the last earnings report. The details of that deal will be determined later.

Editor: Emmi Laine 

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Keywords: Assets Acquisition , Digital Sale Business , Targeted Sale , Social Media , Wechat , Leo Group , TENCENT , MARKETING , Self-Media , MoKa Media