Hey Rayda (and JD) , I can't see why you would thing this was an IPO?
To me it is clearly a takeover by a major Chinese company - Teamsun (either the parent of or the same as Beijing Huasheng Tiancheng Technology Co) - that wants to be a world leader in IT, including IoT.
I can only see it being VERY good or neutral for XPE. I can't see it being bad in any way.
This is my reasoning:
1. Xped has had a very strong relationship with Telink at least for a year, particularly since Dr Sheng joined the Xped board
2. Xped has successfully ported ADRC to Telink’s TLSR8269 chip, as announced on 31 Mar 17
3. A process has commenced to port ADRC to other Telink chips
4. Dr Sheng was quoted as saying on 31 Mar that "The ADRC technology now incorporated into the Telink 8269 chip provides great opportunities for Telink and Xped to work together to jointly market this highly competitive solution. This will allow our customers to utilise our proven IoT chipsets with Xped's ADRC solution to achieve higher levels of functionality and a significant reduction in development time for Tier 1 customers requiring App's and cloud infrastructure".
5. Less than two weeks later, on April 11, Telink signed a "equity Transfer agreement" and a "commitment to profit compensation agreement" transferring 82.7471% of Telink shares to Teamsun, for a consideration of RMB1,603,811,000
My interpretation of the agreement is that while Teamsun will become the majority shareholder (with nearly 83%), the two companies will continue to operate separately. This seems clear in these two phrases in section 5, “the impact of this investment on the company”:
“The company through this participationand the Internet of things mergers and acquisitions fund to help Teamsun and Tailing Microelectronics in key industries to achieve close cooperation, to meet the industry customers on cloud computing, large data, the comprehensive needs of things, to provide customers with data collection set, computing, management and intelligent application of a complete solution services”, and
The investment is the company ….. will not lead to changes in the scope of the company consolidated statements.
6. Teamsun is a giant with an annual turnover of AUS1Billion. From its website:
As a China’s leading integrated IT service provider, Beijing Teamsun Technology Co., Ltd is the first domestic localized IT service provider with its service network across Greater China and part of the Southeast Asia.
Teamsun is headquartered in Beijing with more 5,000 staffs and more 20 holding subsidiaries among more 40 wholly-owned subsidiaries in Mainland China, Hong Kong, Taiwan, Macau and part of the Southeast Asia. Since it was a listed company in 2004, the CAGR has been up to 23%, and now its turnover is more than RMB 5.0 billion yuan.
Teamsun is the first company to put forward IT Service Product in China with its business activities comprising IT product service, development of application software, system integration, value-added distribution and other IT services across Cloud Computing, Big Data, Mobile Internet, Internet of Things and Information Security
7. Teamsun appears to be on an aggressive acquisition pathway in IoT. Apart from Telink, it has also, this month, acquired a US ‘beach head’ in acquiring Grid Dynamics. From the press release:
"Grid Dynamics has innovation in its DNA -- it has been building industry-leading solutions using cutting-edge technologies on a massive scale for leading US companies for over ten years now. We are enthusiastic how, together, we can go after bigger markets and grow faster," says Mr. Weihang Wang, Chairman of Beijing Teamsun Technology Co., Ltd.
"This acquisition is a tremendous milestone for Grid Dynamics," says Leonard Livschitz, CEO of Grid Dynamics. "As a part of the ASL/Teamsun family, we gain access to new markets -- such as China, Hong Kong and other Asia Pacific countries, as well as Europe -- to meet the exploding demand for Grid Dynamics' expertise and next-generation technology solutions around digital eCommerce, Big Data, Cloud and Open Source. On top of that, we can jointly pursue emerging opportunities, such as Connected Cars and IoT in traditional industries, like Manufacturing and Automotive." http://www.marketwired.com/press-release/automated-systems-holdings-limited-asl-successfully- completes-acquisition-grid-dynamics-2208479.htm
8. Teamsun has “established a long-term strategic partnership with 50 multinational enterprises. Therefore, it can congregate the global resources rapidly and conveniently,and provide customers with advanced products, solution and services based on different demands”
9. Telink is joining this super-charged team but will retain relative independence. Therfore, it will be up to Telink on whether or not it keeps its existing relationships with the likes of Xped.
10. Bottom line – if Telink/Xped can find a market for ADRC-embedded Telink chips, the impact of the takeover will be highly positive – simply because Teamsun will be able to open many doors for Telink and Telink will have far improved access to risk capital to get things off the ground. If a market for ADRC-embedded Telink chips cannot be found the impact of the merger will be neutral.
XPE Price at posting:
2.1¢ Sentiment: Hold Disclosure: Held
(20min delay)