CNinsure has signed a definitive agreement to acquire 55% equity interests in Beijing Fanhua Datong Investment Management Company, an insurance intermediary company, for a total consideration of RMB220 million.
CNinsure expects to close the transaction in the fourth quarter of 2008, subject to certain consents, authorizations and other customary closing conditions.
Pursuant to the agreement, the existing shareholders of Datong undertake that Datong will contribute certain amount of net profits to CNinsure in 2009 and 2010. If Datong fails to achieve the net profit contribution targets, these shareholders will transfer part of their equity interests in Datong to CNinsure at nominal value.
In addition, the existing shareholders also undertake to establish 90 sales teams with 3,300 productive sales agents and achieve certain premium targets before 2011.
Datong’s existing shareholders will receive the total consideration in 10 installments while the consideration is subject to adjustment if Datong fails to achieve the aforementioned targets relating to sales teams, sales agents and premiums.
Yinan Hu, chairman and CEO of CNinsure, said: The acquisition of Datong will expedite the expansion of our life insurance distribution network and contribute significantly to the achievement of our life insurance revenue targets. We hope that the joining of Keping Lin and his team will encourage more talented professionals to venture into the insurance intermediary sector.