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Nov. 28, 2011 /PRNewswire-Asia-FirstCall/ -- E-House (
China) Holdings Limited ("E-House" or the "Company") (NYSE: EJ), a leading real estate services company in
China, today announced that it has signed a non-binding term sheet with IFM Investments Limited ("Century 21 China Real Estate") (NYSE: CTC) and its founders. Century 21 China Real Estate is a leading comprehensive real estate services provider and the exclusive franchisor for the CENTURY 21® brand in
Under the proposed transaction, Century 21 China Real Estate will issue approximately 960 million new Class A ordinary shares to E-House and the founders of Century 21 China Real Estate at
$0.0267 per share (
$0.40 per American depositary share ("ADS")). The total number of new shares issued will represent approximately 57.8% of Century 21 China Real Estate's post-issuance enlarged share capital on a fully diluted basis. Century 21 China Real Estate will receive an aggregate consideration of approximately
$25 million. Upon closing of the proposed transaction, E-House will become Century 21 China Real Estate's largest shareholder with a 37.3% ownership stake on a fully diluted basis. Century 21 China Real Estate's founders will have an additional 20.5% equity share on a fully diluted basis, with their purchase of new shares being financed by E-House. The final shareholding split between E-House and Century 21 China Real Estate's founders is subject to minor adjustments prior to the closing of the proposed transaction.
"We are very excited about the opportunity to make a strategic investment in Century 21 China Real Estate," said Mr.
Xin Zhou, E-House's executive chairman. "Century 21 China Real Estate is a leading brand and operator in
China's secondary real estate brokerage sector with national coverage and a top level management team. Although
China's real estate industry currently faces unprecedented challenges and the operating environment for the secondary real estate brokerage sector is particularly difficult, this cooperation will help Century 21 China Real Estate not only strengthen its financial conditions to weather the near-term challenge, but also enhance its market leading position. At the same time, E-House will gain a valuable distribution channel that will augment our comprehensive sales and marketing services for developers. More importantly, our two companies will join hands to push for a fundamental change in the way secondary real estate brokerage is done in
China and create a profitable and sustainable business model. Although the proposed transaction will negatively impact E-House's earnings in the near term given Century 21 China Real Estate's losses, we believe this is an attractive investment opportunity and are confident in Century 21 China Real Estate's management team to turn around its business and improve its operating results."
The closing of the proposed transaction is subject to customary due diligence, board approval by both companies and the signing of definitive transaction documents among E-House, Century 21 China Real Estate, and the Century 21 China Real Estate founders. Century 21 China Real Estate will continue to operate under its existing brand and management team and remain an independent company listed on the New York Stock Exchange.