Business News
Jingwei International Enters New Media Business
Wednesday 06. February 2008 - Signs Letter of Intent to Acquire Profitable Outdoor Advertiser Henan Red Flag
Jingwei International (BULLETIN BOARD: JNGW) (“Jingwei”) today announced its intention to acquire a leading Chinese outdoor advertising company, Henan Red Flag (“Red Flag”) for RMB 90.0 million. The acquisition is expected to be accretive to earnings upon closing, and the Company expects to close the acquisition in the first half of 2008. The acquisition of Red Flag is part of Jingwei’s ongoing development and evolution of its consumer marketing platform.
Red Flag is a leading outdoor advertising company based in Henan, China and which specializes in digital outdoor media, specifically LED/LCD panels placed at bus stands. The Company operates roughly 2,000 outdoor advertising panels, of which 1,000 are LED displays, throughout the capital city of Zhengzhou. Red Flag’s strong market position and unique capabilities will complement Jingwei’s existing data mining and targeted marketing solutions, enabling Jingwei to provide more comprehensive services to new and existing customers.
George Du, chairman of Jingwei International, stated, “Today’s announcement signals our ongoing move into the new media business in China, which includes digital outdoor advertising and real-time consumer marketing in both outdoor and mobile media. Red Flag was particularly interesting to us due to the Company’s existing profitability and exclusive outdoor advertising contracts in Zhengzhou — where Red Flag is the only digital outdoor advertiser — as well as the Company’s near-term pipeline for expansion into five additional cities in 2008.”
The letter of intent was recently signed with Beijing Guorongyizhan Management Consulting Co., Ltd (“the Seller”) to acquire the Seller’s ownership of Red Flag. Cash and equity consideration will be paid in parts to the Seller if and when Red Flag reaches net income of RMB 20.0 million in 2008 and RMB 22.0 million in fiscal year 2009, and assuming certain cost efficiencies are reached and city roll outs are completed. The transaction is subject to definitive documentation and due diligence, which is on-going.
Regis Kwong, Chief Executive Officer of Jingwei International, stated, “We are positioning Jingwei to be the leading consumer marketing company in China and we feel this potentially high-growth, high-profit margin business is a natural progression for Jingwei, given our proven expertise managing and utilizing consumer data. Our clients want to reach their customers in increasingly effective and creative ways. Our ability to use consumer data to execute targeted marketing campaigns on a real time basis, and then own the advertising platform itself, is extremely compelling to us.”