SOURCE: China 3C Group

August 03, 2006 17:11 ET

China 3C Group to Acquire Hangzhou Sanhe for $8.75 Million; Hangzhou Recorded Unaudited Revenues of $16 Million in 2005

ZHEJIANG, CHINA -- (MARKET WIRE) -- August 3, 2006 --China 3C Group (OTCBB: CHCG), the parent company of Zhejiang Yong Xin Digital Technology Co., Ltd., today announced that it will acquire Hangzhou Sanhe Electric Technology Ltd, a rapidly growing home electronics retail chain for $8.75 million. In 2005, Hangzhou Sanhe recorded unaudited revenues of $16 million, compared to revenues of $6.5 million in 2004, a 165% growth rate. Net income for 2005 was $1.25 million, compared to a net income of $0.43 for 2004.

Pursuant to the acquisition agreement, China 3C Group will acquire 100% of Hangzhou Sanhe in a cash and stock transaction valued at approximately US$8.75 million. The Company will issue to the shareholders an aggregate of 915,751 shares of restricted China 3C Group common stock, which is 1.9% of China 3C's outstanding shares, at $4.095 per share and pay cash of $5,000,000 to the shareholders. The cash component is payable by China 3C as follows: $2,500,000 within 10 business days after the Closing and $2,500,000 is payable within six months after the Closing.

Mr. Yong Wu, Chief Executive Officer of Hangzhou Sanhe, commented, "We are very pleased to join China 3C Group. We believe our combination with their company will bring us numerous advantages including a strong marketing network, a variety of products, and proven management team. We believe our growth rate will hit a new record."

Mr. Yong Wu, is the chief executive officer of Hangzhou Sanhe Electronic Technology, Ltd., a position he has held since July 2004. Prior to that, from 2002 to 2004, Mr. Wu was the manager of Trust-Mart, a leading retail chain in China with 100 stores. Mr. Wu received his MBA degree from Zhejiang University.

Mr. Zhenggang Wang, Chief Executive Officer of China 3C Group, commented, "Our goal in 2006 is to expand our product lines and to acquire electronics chains with strong core competencies. We expect to complete the acquisition with Hangzhou Sanhe before August 31."

About China 3C Group

China 3C Group is a leading retail chain operating over 600 independent stores in Eastern China. The Company specializes in selling 3C products (communication products, information technology products, and digital products) in China through its subsidiary Zhejiang Yong Xin Digital Technology Co., Ltd. Among China 3C's primary attributes is its efficient distribution network and rapid logistics system. The Company's goal is to become the number one retailer of 3C products in China.

About Hangzhou Sanhe Electronic Technology, Ltd.

Hangzhou Sanhe Electronic Technology, Ltd. is a home electronics retail chain in Eastern China. It has 200 retail stores in Shanghai City, Zhejiang Province and Jiangsu Province. The company specializes in the sell of home electronics, including DVD players, audio systems, speakers, televisions and air conditioners. For more information on the company, visit http://www.sanhee.cn.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slow down affecting technology companies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-KSB, recent and forthcoming Quarterly Reports on Form 10-QSB, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Contact Information


  • At Company
    Jincheng (Jason) Yuan
    Vice President
    Tel: 201-963-6764
    Fax: 201-963-6794
    Email: Email Contact
    Website: www.China3CGroup.com

    At Financial Relations Board
    Marilynn Meek
    General - 212-827-3773
    Julie Tu
    Analysts - 212-827-3776