Yunhong Green CTI Ltd. (NASDAQ:YHGJ), an Illinois-based company specializing in fabricated rubber products, announced on Monday that it has entered into an Asset Purchase Agreement (APA) with Yunhong Environmental Protection Technology Co., Ltd., and related parties.
The transaction, completed on June 30, 2024, involves the acquisition of manufacturing equipment and a working capital credit, aiming to enhance the company's production capabilities and competitiveness in biodegradable and recyclable materials.
The deal includes a working capital credit amounting to $2,192,229, which will be used by Yunhong Green CTI to cover operational expenses for the newly acquired business. Notably, the company did not assume any outstanding liabilities as part of the agreement. The acquired assets' value was assessed by an independent appraiser.
Yunhong Green CTI issued a total of 5,000,000 shares of its common stock as part of the purchase price, with 3,246,217 shares going to the seller and 1,753,783 shares to Yunhong China Group Co., Ltd. The shares were issued at the market price as of the closing date.
The seller parties are primarily owned by Mr. Yuabo Li, Yunhong Green CTI's Chairman and board member. The transaction was approved by the disinterested members of the company's board after full disclosure.
This strategic acquisition follows the company's shareholder-approved increase in authorized shares of common stock, which was intended to facilitate the pursuit of opportunities to acquire productive assets. The purchase is expected to provide Yunhong Green CTI with expanded manufacturing capabilities and improve its position in the market for environmentally friendly products.
InvestingPro Insights
As Yunhong Green CTI Ltd. (NASDAQ:YHGJ) moves forward with its strategic acquisition, InvestingPro data provides additional context for investors. The company's market capitalization stands at $18.28 million, reflecting its current market valuation. Despite the recent acquisition aimed at enhancing production capabilities, YHGJ's financials show some challenges. The company reported a revenue of $17.94 million in the last twelve months as of Q2 2024, with a modest growth of 5.9%.
InvestingPro Tips highlight that YHGJ's stock has experienced significant volatility recently. The stock has taken a big hit over the last week, with a 1-week price total return of -11.88%. This short-term decline is part of a broader trend, as the stock has fallen significantly over the last year, with a 1-year price total return of -64.4%.
Another relevant InvestingPro Tip notes that YHGJ suffers from weak gross profit margins. This is reflected in the company's gross profit margin of 17.86% for the last twelve months as of Q2 2024, which may explain the strategic move to acquire new manufacturing equipment to improve competitiveness.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 7 more InvestingPro Tips available for YHGJ, providing a deeper understanding of the company's financial health and market position.
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