(Yicai) April 19 — Shares in Chengdu Hi-Tech Development plunged by the exchange-imposed limit today for the second day in a row after the Chinese industrial park construction firm said it is no longer proceeding with its planned acquisition of computing power provider Sichuan Huakun Zhenyu Intelligent Technology due to an inability to agree on the price.
Chengdu Hi-Tech’s share price [SHE: 000628] plummeted 10 percent to CNY44.91 (USD6.20). The stock has more than halved in value since it reached an all-time high of CNY95.70 on March 19.
Chengdu Hi-Tech is withdrawing its offer of CNY2.1 billion (USD290.1 million) for a 70 percent stake in Huakun Zhenyu, said the firm, which is under the Chengdu Hi-Tech Industrial Development Zone Administrative Committee, today.
The reason for the termination is that the buyer could not reach consensus on the sale price with some of the sellers, Chengdu Hi-Tech said. The market expectations for Huakun Zhenyu, which makes computational products for data centers, including servers and storage devices, are high, it added.
Chengdu Hi-Tech had valued the entire value of Huakun Zhenyu at no more than CNY3 billion (USD414 million) when it first proposed the deal in September last year. It planned to issue shares and make cash payments to three shareholders of Huakun Zhenyu, including Chengdu Gaotou Electronic Information Industry Group.
After announcing the planned takeover, Chengdu Hi-Tech’s stock price surged almost six-fold in the following six months. But when the Chengdu-based company said the acquisition was in risk of being terminated on April 9, its stock price started to slide.
Chengdu Hi-Tech has been moving into the semiconductor business in recent years and in 2022 it acquired Semi-Future Technology and CD Power Semiconductor.
The firm’s net profit surged 84 percent last year from the year before to CNY366 million (USD50.55 million) and revenue soared 22 percent to CNY8 billion (USD1.1 billion), according to its latest financial report.
Huakun Zhenyu, which was set up in 2020, logged net profit of CNY47 million (USD6.5 million) in the first nine months of last year on revenue of CNY3.9 billion (USD538.5 million), according to Chengdu Hi-Tech.
Editors: Dou Shicong, Kim Taylor
Wanda Parisien is a computing expert who navigates the vast landscape of hardware and software. With a focus on computer technology, software development, and industry trends, Wanda delivers informative content, tutorials, and analyses to keep readers updated on the latest in the world of computing.
