**Abstract**
Jiangnan Red Arrow has made significant progress in its acquisition of Zhongnan Diamond. Recently, the company released a draft announcement regarding the fixed-income acquisition and fundraising plan. According to the disclosure, the transaction price for 100% equity of Zhongnan Diamond is set at 3.97 billion yuan. The non-public offering price per share is 9.68 yuan, with a planned issuance of 410 million shares. The total amount of funds raised through this offering will not exceed 1.323 billion yuan, and the offering price for matching funds will be no less than 9.68 yuan per share. The pricing mechanism is based on inquiry, with the number of shares issued not exceeding 137 million.
Following the completion of the deal, Jiangnan Red Arrow’s net profit attributable to the parent company in 2012 and 2013 was 339 million yuan and 380 million yuan respectively. To ensure performance targets are met, the original shareholders of Zhongnan Diamond have entered into a performance compensation agreement with the listed company. Under the agreement, if the actual profit of Zhongnan Diamond falls short of the promised level in the fiscal year of the transaction and the next two years, the listed company has the right to repurchase and cancel the counterparty's shares at a symbolic price of 1 yuan. This arrangement serves as a form of performance guarantee.
According to available data, the committed profits from Zhongnan Diamond during the 2013–2015 period totaled 1.264 billion yuan. As one of the leading companies in China's superhard materials industry and the world's largest synthetic diamond manufacturer, Zhongnan Diamond plays a crucial role in the global market. This acquisition is expected to strengthen Jiangnan Red Arrow's position in the sector and enhance its long-term growth potential.
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