Luyitong: Plans to acquire 100% equity of Canaan Creative (Avalon) for RMB 3.06 billion

On the evening of June 8, Shenzhen GEM company Luyitong (300423) issued an announcement that the company intends to purchase 100% of Canaan Creative's equity held by Zhang Nangeng and 14 other parties by a combination of issuing shares and paying cash. After the acquisition is completed, the target company will become a wholly-owned subsidiary of the listed company. After negotiation, the transaction price of 100% equity of Canaan Creative is 3.06 billion yuan, of which 1.061 billion yuan will be paid in cash and 1.999 billion yuan will be paid by issuing shares, and the number of shares issued is 81,348,667 shares.
At the same time, the company intends to use the method of pricing issuance to non-publicly issue stocks to raise matching funds to pay the cash consideration of this transaction, build blockchain ASIC chip industrialization projects, artificial intelligence ASIC chip R&D centers, chip product marketing and service networks, intelligent electrical equipment system solution R&D and industrialization projects and intelligent grid inspection and information system R&D centers, as well as pay intermediary agency service fees. The total amount of matching funds raised shall not exceed RMB 1.67 billion, which shall not exceed 100% of the transaction price of the assets to be purchased this time.
Canaan Creative is the parent company of Avaon, and its general manager Zhang Nangeng is the inventor of the world's first Bitcoin mining machine, Pumpkin Zhang
Luyitong said that after the completion of this transaction, the company will transform from an electrical equipment manufacturing enterprise dedicated to the R&D, design, production and sales of complete sets of electrical equipment to a dual-core company with R&D and manufacturing of electrical equipment and chip design and sales in parallel, and will expand from the traditional equipment manufacturing industry to the upstream integrated circuit industry, dispersing operating risks and providing more reliable performance guarantees for listed companies.
At the same time, the company intends to use the funds raised to build smart grid-related R&D and industrialization projects, involving smart power distribution, power big data, smart inspection, etc. The upgrade of traditional equipment to smart equipment requires the support of core computing chips. The listed company intends to fully combine the three elements of the Internet of Things (network + chip + equipment) through its own technical accumulation in the field of electrical complete equipment and Canaan Creative's accumulated software and hardware technical service capabilities in the chip field to create a system solution for smart grid equipment.
Shandong Luyitong Intelligent Electric Co., Ltd. (listed on February 17, 2015, with its main business being R&D, production and sales of electrical equipment, power supply equipment, components, power transmission and distribution and control equipment) has suspended trading since the opening of the market on March 21, 2016 due to the planning of major events. It is expected to resume trading after the above announcement is issued on June 8.