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Global Sources Completes Purchase of 10 Percent Equity Stake in HC
International Creating China's Largest B2B Media Strategic Partnership
HONG KONG, June 21, 2006 – Global Sources Ltd. (NASDAQ:GSOL) completed the purchase, announced on May 26th, of 47,858,000 HC International, Inc. (SEHK: 8292) shares from IDG Technology Venture Investment, Inc., representing an approximate 10 percent equity stake in HC International. Details of this purchase are set out below.
HC International now intends to invite Global Sources Chairman and CEO, Merle A. Hinrichs, to join HC International's board as a non-executive director.
Option for Global Sources to increase equity stake in HC International
In addition to this purchase, Global Sources has an option to increase its equity stake in HC International by a further 35 percent approximately, at any time within the next 12 months.
If this option is exercised, Global Sources will be required under Hong Kong regulations to make a general offer for all HC International shares held by the public.
China's largest B2B media strategic partnership brings new level of transparency to China
Global Sources chairman and CEO, Merle A. Hinrichs, said: "This formidable partnership between two leading media specialists completely changes the B2B landscape in China.
"From an investor point of view, this alliance allows us to greatly extend our business not only within China, but also from the world to China, and China to the world.
"As at March 31st, Global Sources has $126 million in cash and securities, no debt, as well as positive and increasing free cash flow. This puts us in a very strong position to leverage this partnership to drive growth and enhance value to customers."
IDG Technology Venture Investment General Partner Li Jianguang said: "These two listed companies bring unmatched transparency to China's B2B space. This is absolutely essential for customers and investors.
"Recently, the Investor Relations Global Rankings™ recognized Global Sources with the 'Top 1 IR Website' and 'TOP 5 Disclosure Procedure' awards. This is significant, notably in the China context, as the Awards highlight best practices in investor relations websites, earnings releases and disclosure processes."
Largest China-centric B2B community with 4 million suppliers, 950,000 buyers
Together, the companies operate 72 industry-focused websites serving approximately 4 million suppliers and 950,000 buyers from 230 countries. Combined annual revenue was approximately US$150 million in 2005.
HC International Executive Director and CEO, Guo Fansheng said, "China's future is to provide more than just low cost production. We believe China's continuing success depends on its ability to innovate, and to create domestic and global brands synonymous with international quality and service. Together, our integrated marketing solutions will help China enterprises realize that goal."
Hinrichs said: "From a customer standpoint, we are uniquely positioned to serve the export marketing needs of HC International's clients. This will help even more suppliers participate in China's export sector, which was valued at $762 billion in 2005, up 28 percent over 2004, according to China Customs statistics.
"Likewise, domestic opportunities are great, with China's B2B transactions forecasted to more than triple from 2006 to reach $308 billion by the end of next year, according to Shanghai iResearch. Together, we offer powerful, proven solutions to China's business community, not available anywhere else in the market."
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