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DEA General Aviation to Acquire 51% of Matchmaking Site Zhenai.com

DEA General Aviation, 8/05/17

Guangdong-based manufacturer of kitchen appliances, smart kitchen electrical equipment, and civil aircrafts and engines DEA General Aviation Holding (002260.SZ) has announced that the company will lead a consortium of buyers to acquire Zhenai.com, after which DEA General Aviation will own a 51% stake in the matchmaking site.

DEA General Aviation said that the company's wholly owned subsidiary Shenzhen Qianhai Yilipu Asset Management will serve as the fund manager and general partner for a special purpose fund established for an upcoming transaction. The fund is temporarily designated as the "DEA Zhenai Company." DEA Zhenai will partner with other investors to jointly invest RMB 2 bln in Zhenai (Shenzhen), a wholly owned foreign enterprise.

Shenzhen Zhenai.com Information Technology, the actual operating company behind Zhenai.com, will also inject RMB 277 mln of its own money into the RMB 2 bln fund, which will then be used to purchase a 100% stake in Zhenai (Shenzhen). These funds, apart from being used to buy the company, will also be used to support the dismantling of the matchmaking company's variable interest entity (VIE) framework. Once this transaction is complete, DEA Zhenai will hold a 51% stake in Zhenai.com, other new investors will hold a combined 22% stake, and Zhenai's existing shareholders will hold the remaining 27% stake.

Preliminary agreements indicate that Zhenai (Shenzhen) is valued at approximately RMB 2.74 bln, with the 51% stake equivalent to RMB 1.3974 bln. After the transaction, the matchmaking company will become a subsidiary of DEA Zhenai, with DEA General Aviation Holding as the ultimate controlling shareholder.

DEA Zhenai will continue to provide users with matchmaking services. As of May 31 of this year, Zhenai.com had a total of 100 mln registered users. At present, its main source of revenue comes from O2O outlets that provide one-on-one matchmaking services. Zhenai.com has committed to achieving profits in 2017, 2018, and 2019 of no less than RMB 185 mln, RMB 230 mln, and RMB 310 mln, respectively.

Prior to this transaction, DEA General Aviation Holding's business has consisted primarily of R&D, production and distribution of kitchen and household appliances, and R&D, design, manufacture and sale of civil aircrafts and engines, airborne equipment and systems.

Keywords: Zhenai DEA General Aviation 002260.SZ M&A Internet online matchmaking valuation

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