As to implement the Group’s business transformation strategies; shifting from manufacturing industry to the information technology services industry and transforming itself from product- oriented manufacturer to a service-oriented service provider, also aiming to inject new elements to the Module Business as to continue maintaining its world’s leading position.
On 20 January 2017 (after trading hours), SIM Technology (BVI) (a wholly-owned subsidiary of the Company) and a wholly-owned subsidiary of u-blox Holding AG (a company listed on the SIX Swiss Exchange) entered into the Technology Assignment Contract and the Asset Purchase Agreement, pursuant to which the Group has agreed to sell the Group’s 2G, 3G, 4G wireless communication module and GNSS module business related technology and assets at the aggregate consideration of US$52.5 million (equivalent to approximately HK$409.5 million).
Pursuant to the Technology Assignment Contract, SIM Technology (BVI) shall procure its wholly-owned subsidiaries (i.e. Shanghai Simcom and Simcom Wireless) to assign the Patents and Software Copyrights related to the Wireless Communication Modules Business to u-blox AG at the aggregate consideration of US$40.8 million (equivalent to approximately HK$318.24 million).
Pursuant to the Asset Purchase Agreement, the Asset Vendors have agreed to sell to u-blox AG and u-blox AG’s WFOEs the Technical Secrets and the Patent Application Rights related to the Wireless Communication Modules Business at the aggregate consideration of US$10.9 million (equivalent to approximately HK$85.02 million). To ensure a smooth transition, the Assets Vendors have also agreed to sell to a Shanghai Wholly Foreign Owned Enterprise (WFOE) established by u-blox AG the equipment and facilities related to the Wireless Communication Modules Business (i.e. the Tangible Assets) at the consideration of US$0.8 million (equivalent to approximately HK$6.24 million) (excluding value-added tax).
Whereas, the exclusive assignment of the Group’s patent and technology know-how to u-blox AG, the Group has undertaken not to provide R&D and sale services of the wireless communication business after the closing date specified on the Asset Purchase Agreement. Thereafter, the Group will become an EMS (electronic manufacturing service) for u-blox’ s specified customers.
In order to avoid the substantial loss to the Group arising from the Disposal, the following arrangement has been put in place: u-blox AG has agreed to employ the employees of the Group. The Group will procure them to enter into employment contracts with u-blox AG.
The Group has agreed to authorize u-blox AG to use certain trademarks used in the Wireless Communication Modules Business for an indefinite period and free of charge. While u-blox AG’s WFOEs will take up the unfinished orders of the Group and continue to perform the existing Sales Contracts. The Group also proposes to enter into the Service Agreement with u’s subsidiary for the provision of certain administrative services and office rental contracts.
Having considered the fairness and benefits of the “Disposal Transaction” as described above, the Board is of the view that the terms and conditions of the Technology Assignment Contract and the Asset Purchase Agreement are reasonable and are on normal commercial terms, and also conform to the interests of the Group and its shareholders.
The effectiveness of the Technology Assignment Contract and the Asset Purchase Agreement is subject to the approval by the Shareholders at the SGM under Chapter 14 of the Hong Kong Listing Rules. As to safeguard the benefits of SIM’s shareholders, under the normal business practice, the ownership, usage right and business control right of the target assets (including intangible and tangible assets) related to the “Disposal transaction” will not be transferred and passed to u-blox until the first tranche payment terms on the APA has been performed by U-blox.
Detail terms and conditions should be referenced to the announcement of the SIM Technology Group Limited on 20th Jan 2017. The captioned SIM Technology Group announcement shall prevail in case of any discrepancy and inconsistency with the press release.
