In a significant move, Shineco, Inc. (NASDAQ:SISI), an agricultural production and industrial applications company with a market capitalization of $18.21 million, has entered into a stock purchase agreement to acquire a 75% equity interest in FuWang (HK) International Company Limited. According to InvestingPro data, Shineco has demonstrated strong revenue growth of 146% over the last twelve months, despite operating with thin gross profit margins of 8%. The deal, announced today, involves a cash payment of RMB 63.89 million (approximately $9.5 million), the issuance of 3.4 million shares of Shineco’s common stock, and the transfer of a 71.42% equity interest in Dream Partner Limited to the seller, Yi Yang.
This strategic acquisition by Shineco Life Science Group Hong Kong Co., Limited, a subsidiary of Shineco, aims to expand the company’s footprint in the agriculture sector. The transaction is subject to customary closing conditions, including the transfer of FuWang shares to Shineco Life Science within 10 days post the agreement execution. InvestingPro analysis reveals the company faces significant financial challenges, with a weak current ratio of 0.86 indicating potential liquidity concerns. Subscribers can access 15+ additional ProTips about Shineco’s financial health and market position. Shineco is expected to fulfill the cash payment within 20 days after the completion of the share transfer, while the Shineco shares and Dream Partner shares are to be transferred to the seller within 30 and 20 days, respectively, post-closing.
Shineco, known for its involvement in agriculture production and industrial applications, has not disclosed the expected date of the transaction completion nor provided details on how the acquisition will affect its operations. However, the company’s board of directors has approved the stock purchase agreement and subsequent transactions.
This move is an indicator of Shineco’s strategy to diversify and strengthen its position in the market. The financial impact of the acquisition on Shineco’s balance sheet and earnings will be observed in the upcoming fiscal reports, with the next earnings announcement expected on May 15, 2025. While the stock has shown remarkable strength with a 32% gain over the past week, InvestingPro data indicates the company’s overall financial health score remains weak at 1.35 out of 5. The information disclosed in this article is based on a press release statement from the SEC filing by Shineco, Inc.
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