March 7, 2013
Hollysys Automation Technologies, Ltd. (NASDAQ: HOLI)
("Hollysys" or the "Company"), a leading provider of automation and control technologies and applications in
, announced today that it signed a stock purchase agreement (SPA) to acquire 100% ownership of Bond Corporation Pte. Ltd. and its group of companies ("Bond"). The total consideration for the acquisition is a combination of cash and stock, aggregating an equivalent of approximately
US$ 73 million
, including a two-year incentive program payable in ordinary shares and additional incentive shares if Bond meets certain performance targets.
Bond Corporation Pte. Ltd. is a holding company registered in
, with the subsidiaries Bond M&E Pte. Ltd. incorporated in
in 1979, and Bond M&E Sdn. Bhd. and Bond M&E (K.L.) Sdn. Bhd. incorporated in
in 1983 and 1989, respectively. Bond provides complete mechanical and electrical solutions with end to end capabilities in design, engineering, procurement, project management, construction and commissioning, and maintenance to a wide array of industries, including factories, data centers, banks, hospitals, airports, power stations, gas and instrumentation plants, hotels, commercial centers, residential buildings and infrastructure works. Bond has a strong market presence, a highly renowned brand name, and a successful track record in
Pursuant to the stock purchase agreement, Hollysys will pay a fully refundable cash deposit of
US$ 16.39 million
within one month after signing the SPA, and, after the closing, an additional
US$ 5.51 million
within 6 months after signing the SPA and
US$ 14.6 million
within 18 months after signing the SPA, respectively.
After the closing, Hollysys will issue its ordinary shares worth
US$ 14.60 million
(40% of total share consideration) to the shareholders of Bond. The Bond shareholders also are entitled to Hollysys ordinary shares worth
US$ 10.95 million
(30% of total share consideration) as incentive shares in each of the next two fiscal years if Bond's US-GAAP audited net income equals or exceeds
US$ 8.81 million
US$ 10.57 million
for Bond's fiscal year 2013 ending
December 31, 2013
, and fiscal year 2014 ending
December 31, 2014
, respectively. Additional ordinary shares, as a premium on performance, will be issued to the Bond shareholders if Bond outperforms the targets mentioned above, but the premium will not exceed 15% of the total incentive shares in any case. Hollysys and Bond have agreed upon the compensation and incentives to be given to the management team of Bond to maintain the team stability after the acquisition.
, CEO and Chairman of Hollysys, commented: "We are very pleased with this highly accretive and complementary acquisition of Bond after our successful acquisition of Concord Corporation Pte. Ltd. and its group of companies ("Concord"). Concord has a strong presence and capability in the rail and transportation field in
markets, while Bond has much wider presence in the industrial field in
. We believe that these two corporations together will further establish our strong foothold in the fast growing
industrial automation and rail transportation fields. Besides, both of these two companies can provide Hollysys a readily available channel to cross sell our existing product lines in rail and industrial segments. We also are excited to be able to retain a team of seasoned, efficient and productive professionals through this acquisition. Hollysys will leverage its strong proprietary technology and its capabilities accumulated from its leading positions in
's industrial and rail segments to enter and penetrate into international market, through both organic growth and accretive acquisitions to maximize our shareholder value."
Mr. Yap Choong, Executive Director of Bond, commented: "We are honored to be able to join and team up with Hollysys, a well-established proprietary technology and product provider in industrial automation and rail transportation in
. We are seeing great opportunities lying ahead of us, given the fast growth in the infrastructure, residential, industrial industries in our addressable markets in
. With more than 30 years strong track record, we believe the combination of our existing customer base and complete electrification solution capabilities and Hollysys' proprietary technology and products will be of great benefit to capture the growth opportunities, both in the current addressable geographical regions and other international markets at large."
, CFO of Hollysys, commented: "This is another sizable and meaningful acquisition since we acquired Concord in 2011. We achieved productive results after the acquisition of Concord, and made several significant international breakthroughs. We believe Bond will be a strong complement to Concord in helping Hollysys to penetrate the
industrial automation market. We are very pleased to have concluded the SPA to acquire such a successful platform together with a team of professionals at a highly accretive valuation to its forward earnings. Bond meets all of our acquisition criteria, which we laid out as our corporate acquisition strategy, of accretion, complement, and ease of integration. We expect this acquisition will be closed around
April 1, 2013
, from when Bond revenue and income would be fully consolidated and reported under Hollysys. Going into the future, we will continue to work on efficiently using our cash to support our company's stable and sustainable growth and maximize our shareholders' value."