Heavyweight! Huanxu Electronics plans to acquire Tyco Electronics’ automotive wireless business

Recently, Huanxu Electronics announced that its wholly-owned subsidiary Huanhong Electronics Co., Ltd. plans to establish a special purpose vehicle (SPV) company (hereinafter referred to as “SPV Company”) in a joint venture with Ample Trading, Co., Ltd. to acquire Tyco Electronics Co., Ltd.’s automotive wireless business at an overall valuation of $48 million.
It is understood that the total share capital of SPV Company is 53 million US dollars, of which 75.1% is contributed by Huanhong Electronics and 24.9% is contributed by Ample Trading. SPV Company acquired TE Connectivity Ltd.’s automotive wireless business (TE Automotive Wireless, hereinafter referred to as the “Target Business”), with an overall valuation of 48 million US dollars, The actual purchase price will be paid in cash based on the overall valuation of the target business and adjusted according to the actual net debt and working capital level of the target business on the delivery date.

For the purpose of this transaction, Huanxu Electronics stated that the company has accumulated years of experience in communication module design and manufacturing. To deepen the layout of Internet of Vehicles products, optimize customer structure and increase the number of customers, and achieve a business layout that extends from modules to system solutions.
The announcement shows that Tyco Electronics Co., Ltd.’s automotive wireless business is mainly engaged in the research and development, design, and production of automotive antennas, tuners, and on-board communication related products, and provides customers with complete solutions.
The target business mainly focuses on serving customers in the European region, maintaining long-term product development partnerships with customers. In North America and the Asia Pacific region, there are also professional teams that provide product development services and product debugging according to customer needs.
According to the evaluation and review opinion issued by independent accountant Guofu Haohua United Accounting Firm on the valuation of the target business, it is believed that the valuation result of the target business is between 464 million US dollars and 572 million US dollars, which is still within a reasonable valuation range. This time, Huanxu Electronics plans to invest based on the overall enterprise value of 48 million US dollars, according to the shareholding ratio obtained (with control rights), and then adjust the transaction price according to the contractual agreement. The enterprise value falls within the aforementioned valuation range, which is reasonable and appropriate.