Recon Technology, Ltd. (NASDAQ: RCON), a company specializes in providing software and on-site services to companies in the petroleum mining and extraction industry in China, announced on Monday the acquisition of Qinghai Hua You Downhole Technology Co., Ltd ("QHHY"), oilfield service provider in Qinghai province. The acquisition will be a 100% equity interest, and it meant to expand the service chain and strengthen operation in West China for Recon.
The buyout is valued at $6.0 million, including $3.6 million worth of Recon ordinary shares and $2.4 million in cash, with QHHY achieving net profit growth of 15% for fiscal 2016 and fiscal 2017. Once shareholders approve of the transaction, Recon’s shares will be issued at 120% of the weighted average closing price of Recon's ordinary shares for the past 20 trading days prior to the Effective Date. The approval is expected to be obtained around February 2016. The shares then will be issued to the current shareholders of QHHY.
Recon Technology is China's first independent oil and gas field service provider company to be listed on NASDAQ. The company’s clients are two of China’s largest oil exploration companies, Sinopec Shanghai Petrochemical (NYSE:SHI) and China National Petroleum Corporation (CNPC). Shares of Recon have increased more than 75% in one month, as of December 7th 2015.