Future FinTech Group Inc. (FTFT) stock declines by 9.68% in the current market trading. Future FinTech Group, based in Florida, is a leading blockchain e-commerce firm and financial technology service, provider. Chain Cloud Mall, a blockchain-based online shopping mall portal, a cross-border e-commerce platform, and an incubator for blockchain-based technology ventures are among the company’s activities.
What is happening?
The Company announced today that it has entered into an equity acquisition contract agreement with Mingtang Network Technology Co.’s shareholders to purchase a 51 percent equity stake in that company. Mingtang Network is based in the Xinjiang Autonomous Region of China’s Changji Zhundong Economic and Development Zone. Except for the provisions on “Confidentiality and Exclusivity” and “Applicable Law and Dispute Resolution,” the Framework Agreement is non-binding.
According to the Frame Agreement, FTFT will buy 51 percent of Mingtang Network’s equity for RMB 45.9 million, based on a value of 100% of Mingtang Network’s equity for RMB 90 million. However, the parties will decide the actual purchasing price, which will be dependent on the conclusion of a financial analysis of Mingtang Network and awaiting the due diligence and a binding agreement between the parties.
The Sellers guarantee that Mingtang Network’s audited profits before interest and taxes will be at least RMB 40 million in 2021, and if this does not happen, the Sellers offer to cover any deficit in this amount and make Mingtang Networks a whole in terms of the expected EBIT with a cash payout.
FTFT and the Sellers plan to invest in the development of a Phase II data center with a 500,000 capacity load for cryptocurrency mining machines in a time frame that is mutually agreed upon. The overall investment in Phase II is estimated to be about RMB 600 million (approximately US$ 91.7 million), and will be financed according to Mingtang Network’s ownership share, with the Company owning 51 percent and the Sellers owning 49 percent.