MingZhu Logistics Holdings Ltd (NASDAQ:YGMZ) shares went airborne on word the company has entered a Share Purchase Agreement to acquire 100% of the equity interest of Cheyi (BVI) Limited for a total consideration of ~$29.47 million.
Cheyi operates its business through its subsidiary Zhejiang CheYi Network Technology Co., Ltd., an integrated online car-hailing and driver management services company.
CheYi Network was established in December 2015 as a comprehensive automobile service platform, providing a full range of services to the automotive industry. CheYi Network has built an integrated business platform with more than 6,000 vehicles and drivers for ride hailing services under management. Its vehicles and drivers provide services to major mobility technology platforms, such as SAIC Mobility and T3 Mobility.
MingZhu expects the acquisition to offer customers additional platform enhancements and directly fits its acquisition strategy, which includes adding financially accretive, best-of-breed companies and products.
The consideration consisted of ~3.19 million fully paid MingZhu Logistics ordinary shares priced at $4 per share (total ~$12.76 million) and payment of $2 million at closing.
The consideration also consisted of 2021 earnout payment of ~$8.83 million and Year-2022 earnout payment of ~$5.88 million if the Cheyi BVI’s audited net income for its fiscal year 2021 and 2022 is no less than $3 million respectively.
MingZhu Logistics held cash and equivalents of $14.2 million as of June 30, 2021. The company expects the transaction to close by New Year’s Eve.
YGMZ shares are trading higher 29 cents, or 16.4% at $2.06 soon after the opening bell on Wednesday.