China Electric Motor (CELM) to Acquire 100% Interest in Shenzhen Guofa Optoelectronics

QualityStocks would like to highlight China Electric Motor, Inc. (Nasdaq: CELM), a China-based company that engages in the design, production, marketing and sale of micro motor products through its subsidiaries, Shenzhen YuePengCheng Motor Co., Ltd. and Ningbo Heng Bang Long Electrical Equipment Co., Ltd. The company's products are incorporated into consumer electronics, automobiles, power tools, toys, and household appliances, and are sold under its "Sunna" brand name.

In the company’s news yesterday,

China Electric Motor announced that its indirect wholly owned subsidiary Luck Loyal International Investment Limited has entered into an Equity Transfer Contract with New-Metal (H.K.) Technology Limited.

Per the agreement, Luck Loyal will purchase 100 percent of the equity interests of Shenzhen Guofa Optoelectronics Co. Ltd., a wholly foreign owned enterprise incorporated in China held by New-Metal, for approximately US$6.5 million.

Through the deal, China Electric will acquire new production lines and expertise focused on high-end DC micro motors used in products like digital cameras, cell phones, electronic door locks, and other similar products, which Guofa sells to clients such as Ricoh, Toshiba, Philips, OMRON, Panasonic, OLYMPUS, and Taiwan Asia Optical.

In 2010, Guofa reported approximately US$12.7 million in revenue and approximately US$1.3 million in net income.

“This acquisition further establishes our presence in the high-end DC micro motor category. Guofa has a blue chip customer base and serves markets in which we currently have no presence. Part of our strategy over the past two years has been to diversify our overall product offering beyond home and kitchen appliances. Guofa has an established customer base and a strong product portfolio in niche areas like camera printing machines and automobile door lock motors, which help with our diversification efforts,” Yue Wang, CEO of China Electric stated in the press release.

China Electric will pay the purchase price in three installments. The closing of the transaction is expected to take place within the next 120 business days, subject to government approvals.

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