US-based Zoom Technologies, a developer of communication-related products, has entered into a definitive agreement to acquire TCB Digital, a Chinese company primarily engaged in manufacturing of mobile phones.
According to the definitive agreement, Zoom will initially own 51% of TCB Digital by issuing 4.22m Zoom shares. In addition, another 29% of TCB Digital may be exchanged for an additional 2.4m Zoom shares, resulting in Zoom owning 80% of TCB Digital.
Zoom will also have options to acquire five other companies that are under the ownership of TCB Digital’s majority shareholder, with the option price of each company based on the higher of a minimum price or a multiple of that company’s net income.
Zoom would spin off its current business and operating subsidiary, Zoom Telephonics, in a transaction that is not anticipated to be a taxable distribution to Zoom’s shareholders. Zoom Telephonics would grant TCB Digital licensing rights for Zoom and Hayes trademarks for certain products and geographic regions.
Frank Manning, president and CEO of Zoom, said: We believe that the transaction we announced today benefits not only Zoom’s current shareholders and employees, but also all stakeholders of TCB Digital. Zoom’s shareholders get a significant stake in a valuable company that’s a significant player in China, the largest mobile phone market in the world. At the same time, Zoom’s shareholders also retain their stake in Zoom’s existing business and operations.
