Pansoft to Acquire 55% Equity Stake in Shandong HongAo Power Technology Co., Ltd.
JINAN, CHINA--(Marketwire - 04/26/10) - Pansoft Company Limited (NASDAQ:PSOF - News) ("Pansoft" or the "Company"), a leading ERP software service provider for the oil and gas industry in China, today announced that it has signed an agreement to acquire a 55% equity stake in Shandong HongAo Power Technology Co., Ltd ("HongAo Power") for approximately $2.6 million.
HongAo Power is a leading comprehensive technology solution and service provider focused on energy-saving and pollution-reducing solutions for the thermal power generation industry in China. They have developed over seven proprietary solutions, and own five software copyrights and five patents in the areas of coal consumption reduction in combustion, residual heat utilization, smart diagnosis and optimization system for thermal power generating performance, intelligent cooling control in condensator, etc. These technologies have been tested and applied in HongAo's current clients' plants with proven record of effective results and long lasting performance. They have approximately 40 customers in China, most of which are thermal power plants in the Shandong Province, one of the large thermal power generation bases in northern China. HongAo Power's technologies have broad application in thermal power industry and are also expandable to other areas. The thermal power industry represents approximately 83% of overall power generation capacity and is one of the fastest growing segments in the power generation business in China.
Based on HongAo Power's past performance and expected technology applications, its revenue and net profits during Pansoft's fiscal year of 2010 through 2011 are projected to be approximately $7 million and $1.3 million, respectively. The forecast is estimated by HongAo Power's management, and is subject to adjustment pending market conditions. The acquisition will be funded by Pansoft's cash on the balance sheet.
"The strategic move to acquire HongAo Power's technology and service is a part of Pansoft's long term goal to penetrate into energy and power generation market as an integrated solution and service provider and to expand Pansoft's technical capability in production and related technologies so as to become a more comprehensive software service provider," said Hugh Wang, Chairman of Board, "Additionally, the acquisition will expand Pansoft's current ERP solutions' market into the power generation industry. Pansoft will take a 55% equity stake in HongAo Power's equity at this stage and we may increase our ownership in the future depending on their business progress. I believe HongAo Power's technology has broad market potential and strong demand and will accelerate its growth by leveraging Pansoft's brand equity and cash injection." Mr. Wang added: "The acquisition of HongAo is the first step in the implementation of our corporate expansion strategy. We expect to have additional acquisition projects to be announced and completed in 2010." |
