PacificNet Enters Into Definitive Agreement to Acquire Beijing iMobile, the Leading Internet Information Portal and E-commerce Distributor for Mobile
10 February 2006
PacificNet Inc. (Nasdaq: PACT), a leading provider of Customer Relationship Management (CRM) and telemarketing services, call center, Direct Response Television (DRTV) and Value-Added Services (VAS) in China, announced today that it has entered into a definitive agreement to acquire a majority interest in Beijing iMobile ("iMobile"), one of the leading internet information portal and e-commerce distributor for mobile phone and accessories and mobile related value-added service providers in China. The acquisition is expected to close during the first quarter and to be accretive to the Company's earnings in 2006.
iMobile operates its e-commerce business via two internet portals, "http://www.iMobile.com.cn" and "http://www.18900.com," and one WAP portal "17wap.com" for mobile phone browsing. In addition, iMobile's 18900.com operation is the designated internet distributor for Motorola, Nokia, and NEC's mobile products in China. 18900.com is the leading internet e-commerce distributor of mobile products in China, and provides internet, email, customer service centers, pre-sale and post-sale services, logistics and cash-on-delivery (COD) services to mobile related products in China. iMobile's 18900.com e-commerce operations combines both online internet services with its offline customer services network composed of a nationwide chain of logistic and customer centers covering 21 provinces and 40 major cities in China, including Beijing, Shanghai, Chongqing, Tianjin, Chengdu, Dalian, Qingtao, Guangzhou, Shenzhen, Zhuhai, Dongguang, Hanzhou, Suzhou, Ningbo, Wenzhou, Nanjing, Wuhan, Xian, Harbin, Qiqihaer, Hunan and Changsha.
iMobile's internet portal has been one of the top ranked traffic sites and has achieved about 2.3 million registered online users and over 400,000 active users, with 5 million daily page views and 20,000 blog postings per day, which makes iMobile the top ranked site in its category in China.
The purchase consideration for 51% of the equity interest of iMobile is approximately US$1.8 million, which represents approximately seven times the anticipated future annual net income of iMobile. The purchase consideration is payable 14% in cash and 86% in restricted shares of PACT valued at $8 per share, or about 172,000 restricted shares. Under the purchase agreement, iMobile has committed to generate US$500,000 in annual net income. In the event of a shortfall, the purchase price will be adjusted accordingly. PacificNet will also invest approximately RMB 2 million (about US$250,000) in iMobile for general corporate and working capital purposes to support growth. The purchase price is payable upon achievement of certain quarterly earn-out targets based on net income.
In addition, iMobile has achieved strong growth in its VAS including SMS, WAP, JAVA, MMS, IVR, multimedia entertainment and mobile-game download services, media interactive products, mobile email, entertainment, and mobile information services. iMobile's integrated value-added mobile services system will enhance the implementation of PacificNet's "iPACT Network," a standard service-mark for PacificNet's VAS profit-sharing alliance partnership program. Under the iPACT program, PacificNet will provide all of the hardware, software, application, and content for VAS and other wireless and fixed-line VAS content to qualified VAS-Alliance partners on a profit sharing basis. iPACT's VAS content includes video, audio, color ring back tone (CRBT) services, background music (BGM) services, VICQ mobile instant messaging services, sports news, weather forecasts, stock market, humor, songs and mobile karaoke, mobile TV and video, games, entertainment, as well as community-oriented services such as chatline and dating services. Mobile and fixed-line phone users can access PacificNet's VAS-Alliance services through Guangzhou 3G presence in 26 provinces in China.
"We are very impressed by the experience of iMobile's founders and their team of VAS professionals and their enthusiasm," said Victor Tong, President of PacificNet. "iMobile's nationwide e-commerce and VAS network and customer service centers covering 40 major cities in China represents an opportunity to enhance PacificNet's iPACT VAS network in China. The acquisition is expected to expand PacificNet's position as a leading provider of e-commerce, customer services and CRM in China's mobile distribution market and increase our e-commerce and VAS revenues, profits, and our nationwide CRM service coverage."
"We are excited to successfully be acquired by PacificNet," said Liu Lei, CEO of iMobile. "The parties have already had extensive discussions over the past year and have begun integration plans. "We believe our internet portal, which is one of the leading destination sites in China, and e-commerce services and innovative value-added services will contribute significantly to PacificNet's overall revenue and profits. We look forward to growing along with the PacificNet VAS platform by joining the iPACT program. This partnership should create compelling synergies in management, mobile technology, distribution network, and sales and marketing under the common iPACT brand name. With China being the largest and fastest growing telecom market in the world, with over 400 million mobile subscribers and over 111 million internet users, we believe our e-commerce and value-added services will fill the strong demand for mobile products and quality online and offline customer services, while contributing positively to PacificNet's bottom line. In addition, the anticipated launch of 3G service in China later this year is expected to create new profit opportunities for us as well as our overall iPACT VAS program."
About PacificNet
PacificNet Inc. (http://www.PacificNet.com), through its subsidiaries, invests in and operates companies that provide outsourcing and Value-Added Services (VAS) in China, such as call centers, telemarketing, direct response television (DRTV) marketing, CRM, interactive voice response (IVR), mobile applications, and communications product distribution services. PacificNet's clients include the leading telecos, banks, insurance, travel, marketing, and business services companies, and telecom consumers, in Greater China. PacificNet's corporate clients include China Telecom, China Mobile, Unicom, PCCW, Hutchison Telecom, Bell24, SONY, TCL, Huawei, American Express, Citibank, HSBC, Bank of China, Bank of East Asia, DBS, TNT, and Hong Kong Government. PacificNet employs over 2,000 staff in its various subsidiaries throughout China with offices in Hong Kong, Beijing, Shenzhen, Guangzhou, and branch offices in 26 provinces in China, and is headquartered in Minneapolis USA and Hong Kong.
Safe Harbor Statement
This Company's announcement contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Potential risks and uncertainties include, but are not limited to, PacificNet's historical and possible future losses, limited operating history, uncertain regulatory landscape in China, fluctuations in quarterly operating results. Further information regarding these and other risks is included in PacificNet's Form 10K and other filings with the SEC.
Source: prnewswire
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