Alibaba.com has entered into a share purchase agreement to acquire China Civilink (Cayman), which operates in China as HiChina Web Solutions, in a deal that could be valued about RMB539.98m ($79.06m) in cash upon completion of two phases. The transaction is expected to be closed by end of the year.
In a separate statement, business process services company Synnex said that it was selling its estimated 79% controlling ownership in HiChina Web Solutions for about $60m, subject to a 10% holdback.
HiChina Web Solutions is a provider of comprehensive internet application services to businesses, which covers domain services, hosting services, email systems, web site creation, as well as consultation services for eCommerce to assist businesses in applying eCommerce to their business.
Alibaba.com said that, with the acquisition it would gain four key assets, a large customer base, new value-added applications, automated ‘do it yourself’ website technology and a strong management and operating team.
Under the terms of the deal, Alibaba.com will acquire 85% of HiChina for a cash consideration of RMB435.42m ($63.75m) with an additional 14.67% retained by the founders of HiChina, who will continue to be involved in daily management of the company.
The company said, dependent upon HiChina reaching certain performance targets, the founders of HiChina have an option to sell their 14.67% equity interest in HiChina to Alibaba.com over the next three years for an additional consideration of RMB104.56m ($15.31m) in cash.
Kevin Murai, president and CEO of SYNNEX, said: “While HiChina Web Solutions has been a successful and profitable business for SYNNEX, as we evaluated our overall business strategy and the direction we are driving SYNNEX for future growth and expansion, we felt HiChina Web Solutions would be better positioned with a new partner that is more closely aligned with its business strategy in China”
In addition, Alibaba.com has also agreed, among other things, to transfer certain shares of HiChina held by Alibaba.com to the management and key employees of HiChina pursuant to earn-in arrangements, subject to their meeting certain post-completion performance milestones during 2011 to 2015.
HiChina Web Solutions contributed approximately $0.09 and $0.17 to SYNNEX’ diluted earnings per share for the nine months ended August 31, 2009 and fiscal year ended November 30, 2008, respectively.
