Dec 7, 5:27 PM ET
Recon Technology agrees to buy oilfield service firm QHHY for $6.0 million
Recon Technology, Ltd. signed a share purchase agreement dated December 1, 2015 to acquire Qinghai Hua You Downhole Technology Co., Ltd. (QHHY), an oilfield service provider in Qinghai province, China. The deal is subject to Recon shareholder approval, which the company expects to obtain around February 2016, and the cash payment depends on QHHY meeting net profit targets for fiscal 2016 and 2017.
- Consideration is $3.6 million in Recon ordinary shares plus cash; the press release gives $2.4 million in cash and a $6.0 million total, while the 8-K states up to $4.8 million in cash
- Shares will be issued at 120% of the weighted average closing price over the 20 trading days before December 1, 2015, with a 12-month lock-up
- Cash payments depend on QHHY's net profit growth of 15% for fiscal 2016 and 2017, based on audits reviewed in September 2016 and September 2017
- QHHY was partly owned by director Chen Guangqiang, who sold his interest on January 17, 2015 but remains a management employee of QHHY