21st Century China Real Estate will continue to operate independently as a standalone NYSE listed company under the management of its existing management team. However, the completion of the proposed transaction will be subject to customary due diligence, final approval by the boards of directors of EJ and 21st Century China Real Estate, and the execution of definitive agreements by all parties. Upon completion of the transaction, EJ will become the largest shareholder of 21st Century China Real Estate holding approximately 37.3% of its shares; while the founders of 21st Century China Real Estate will increase their holdings in the company to 20.5%. The final equity ratio allocation between EJ and the founders of 21st Century may be adjusted according to relevant terms in the direction of cooperation.
The "dire" survival environment has forced the brokerage industry to accelerate restructuring. Following the "wage arrears" storm in the Wenzhou region, 21st Century China Real Estate has once again become a focal point of attention due to reports of an acquisition. Yesterday, the headquarters of 21st Century Real Estate Group denied rumors of being acquired and announced that 21st Century Real Estate had signed a non-binding letter of intent with E-House (China) Holdings Limited. 21st Century China Real Estate will receive approximately $25 million in capital injection from its founders and E-House (China), and will continue to operate independently under the current management team. E-House (China) is merely a strategic investor in 21st Century Real Estate.
In fact, the performance of both companies is not ideal. According to the announcement, in the third quarter of 2011, E-House (China) reported a net loss of $425.6 million, compared to a net profit of $9.6 million during the same period last year. The performance of 21st Century Real Estate is also not optimistic. Its third-quarter financial report shows a net loss of 92.9 million yuan, an increase of 83% year-over-year, while the number of directly-operated stores decreased by 103 compared to the previous quarter, a reduction of 17%.
Regarding this matter, Zhang Dongchun, Chairman and CEO of 21st Century China Real Estate, stated that this transaction represents a win-win combination between two leading real estate service providers in China. Guo Yi, market director of Asia House Institution, told reporters that the business of E-House's subsidiary Eju Chengxin Brokerage Company mainly focuses on Shanghai, but as E-House's primary marketing agency business expands nationwide, its secondary housing business segment has been unable to keep up with the development speed of its primary business. This shortcoming in business layout could be addressed through the acquisition of 21st Century Real Estate.
According to reports, 21st Century Real Estate and E-House have signed a non-binding letter of intent. Based on this letter of intent, 21st Century China Real Estate will issue approximately 960 million new ordinary shares at a price of $0.0267 per ordinary share (or $0.40 per ADS) to E-House and the founders of 21st Century China Real Estate. This means that 21st Century China Real Estate will receive approximately $25 million in capital injection from its founders and E-House (China). The newly issued shares will account for approximately 57.8% of the fully diluted share capital of 21st Century China Real Estate after the capital increase.
Website: www.0356t.com
July 2009, www.0356t.com
In 2012, the concentration of China's group-buying websites will continue to increase, www.0356t.com
This also provides an opportunity for individual investors to make gains, www.0356t.com