Perth-based Vmoto Ltd has acquired 67 per cent of Chinese scooter engine and scooter assembly group Shanghai Haiya Power Manufacturing Co Ltd for cash contributions of $1.6 million over 12 months, the company announced today.
Perth-based Vmoto Ltd has acquired 67 per cent of Chinese scooter engine and scooter assembly group Shanghai Haiya Power Manufacturing Co Ltd for cash contributions of $1.6 million over 12 months, the company announced today.
Vmoto said in an announcement the acquisition would cut two years off its manufacturing expansion schedule.
The company acquired 100 per cent of Shanghai-based scooter/motorcycle trading and distribution group Freedomotor Company Ltd earlier this year.
The full text of a company announcement is pasted below
An Australian company has acquired a 67% stake in a Chinese scooter engine and scooter assembly group - and immediately announced plans to build a state-of the-art assembly plant near Shanghai to house its latest expansion.
ASX-listed scooter wholesaler and distributor, Vmoto Limited (ASX code "VMT") said today the acquisition of the majority stake in Shanghai Haiya Power Manufacturing Co. Ltd would be revenue positive from tomorrow (Friday June 1).
The new assembly plant will transform the Australian scooter and All Terrain Vehicle (ATV) specialist into a fully vertically integrated scooter group with significant international and Australian operations.
The acquisition and plant construction decisions slash by two years, Vmoto's original intention to expand into manufacturing - and represent the fourth stage of the Company's long-term strategy to build a global scooter business.
The fifth and final stage, to be implemented from mid-2008, will see Vmoto consolidate its expanding wholesale distribution, retail, marketing, manufacturing and OEM operations, under one global branding initiative.
Vmoto's push into scooters commenced with the acquisition in June last year of the global operations of Vmoto Motorcycles, owner and distributor throughout Australia, New Zealand, the United States and U.A.E. of the class-leading Vmoto scooter brand and a range of ATVs.
In January this year, Vmoto acquired 100% of Shanghai-based Freedomotor Company Limited, an international scooter/motorcycle trading and distribution group.
It is one of China's largest independent distributors and exporters of scooters, motorcycles, ATVs and hi-performance off-road karts, with distribution rights in more than 50 countries across Europe, Australia, North America, South America and South Africa.
Terms of agreement
Under the terms of the Haiya Power agreement announced today, Vmoto will acquire a 67% interest in an engine assembly plant and separately, a scooter assembly plant with accompanying government sanctioned second class manufacturing licence.
The remaining 33% will be owned by Haiya Power's senior management, most of which are ex-senior Honda Sundiro executives.
These include the well respected mechanical engineer, Mr Ligang, the former General Manager of the China based Honda scooter JV that produces some 700,000 units per annum.
The Haiya Power engine assembly factory near Shanghai produces between 1,000 and 2,000 high performance, environmentally efficient, 4 stroke 50cc and 125cc engines per month, half of which are currently being exported to a leading scooter manufacturer based in Korea.
Vmoto and its Chinese partners will lease the existing scooter assembly factory while the new plant is being built.
Vmoto Managing Director, Mr Patrick Davin, said the factory is expected to commence Original Equipment Manufacture (OEM) production of scooters within 2 months, adding further significant revenue and additional margin to the existing consolidated operations of the Vmoto and Freedomotor businesses.
"Revenues from Haiya Power will be enjoyed from the effective date, 1 June 2007," Mr Davin said.
"The total investment required for the engine assembly plant, scooter assembly plant, manufacturing licence, land and factory premises at Nanjing, are estimated at approximately A$2.39 million," he said.
"Of this, Vmoto will contribute approximately A$1.6 million cash in various stages over the next 12 months for its 67% interest and will fund this from internal cash flows. "
The Chinese partners in the venture will contribute A$788,000 representing their 33%, of which approximately A$708,000 will be in cash and the balance as plant and equipment located at the existing Haiya Power company.
Vmoto's interest will be held by Shanghai Vmoto Enterprise Management Co Ltd, which is to be incorporated in China as a wholly owned subsidiary of Vmoto Limited.
