SHENZHEN, China, March 15, 2012 /PRNewswire/ -- Cogo Group, Inc. ("Cogo", or the "Company") (NASDAQ: COGO), a leading gateway for global semiconductor companies to access the industrial and technology markets in China, today announced that its founder, CEO and Chairman, Jeffrey Kang, proposed to the Cogo Board of Directors that he purchase a series of operating entities accounting for approximately 30% of Cogo's total assets, liabilities and revenue through his personal investment venture, Envision Global Group.
The total purchase price is expected to be between $60 million and $82 million, depending on the results of an appraisal by an appraisal firm. The deal is expected to close during the second quarter of 2012, subject to approval by an audit committee that is comprised of the independent directors on Cogo's Board. Since this is a related-party transaction, the audit committee will oversee the entire process through to the deal's closure.
The transaction provides an implied share valuation of $6-$8 a share. At the NASDAQ close on March 13, Cogo's share price stood at $1.84 a share.
The proposal includes the purchase of a series of Cogo's operating entities accounting for approximately 30% of all assets and liabilities (including inventories, accounts receivables and bank debt), and about 30% of total Cogo revenue. It is expected that the purchased entities will have higher working capital requirements than the current Cogo corporate average. Mr. Kang will continue to serve as Chairman and CEO of Cogo on a full-time basis. While independent from Cogo, the purchased entities will continue to be run in the same manner as before. Management of the purchased entities will be promoted from within, while Mr. Kang will only serve as a non-executive director.