Mainland internet portal Tom Online will pay as much as 600 million yuan to acquire Beijing-based wireless entertainment service provider Infomax, the company says.
The total cost of the deal hinged on Infomax's earnings performance this year and next, Tom said yesterday.
For this year, if the takeover target earns less than 35 million yuan, Tom Online will pay 2.5 times earnings as an initial payment. If earnings exceed 35 million yuan, the multiple will rise to 3.5 times.
Similarly, if Infomax's earnings surpass 65 million yuan next year, Tom will pay four times earnings; if they fall short, that will drop to three times.
Tom expects that the purchase could add more than 10 US cents per American Depositary Receipt in earnings next year.
Infomax had net profit of 46 million yuan for the year to December last year on revenue of 121 million yuan.