Tri-Tech Holding Inc. (NASDAQ:TRIT - News), a premier Chinese company that provides leading turn-key solutions in China for water resources, water and wastewater treatment, industrial safety and the pollution control markets, announced today that its subsidiary, Tri-Tech High-Tech (Beijing) Co. Ltd. ("Tri-Tech Beijing") has agreed to acquire 51% of Beijing Huaxia Yuan Jie Water Technology Co., Ltd. ("Yuan Jie Water").
Yuan Jie Water is a high-tech enterprise engaged in water system integration for large high-rise buildings, R&D, manufacturing, installation and sales and operation of water treatment equipment systems directly affecting consumer use.
Under the terms of the agreement, Tri-Tech Beijing will invest approximately RMB 11 million (approximately $1.7 million) into Yuan Jie Water. This includes 10 million Yuan in cash as well as intellectual property worth 990,000 Yuan. The closing will occur upon completion of corporate and regulatory formalities in China. The two companies are in the process of capital injection and equity change registration in accordance with Chinese regulations. The transaction is expected to be completed by the end of June 2011.
Management Review
Tri-Tech Holding CEO Mr. Warren Zhao said, "This is our second domestic acquisition following the highly successful acquisition of BSST last August and our third overall after our acquisition of US-based J&Y International Inc. earlier in June 2011. We expect Yuan Jie Water will expand our reach into a new sector of the water industry. We already provide services for China's wastewater, water treatment, pollution and odor control, groundwater monitoring and flood management, industrial safety segments and are eager to diversify into the building water system integration and water treatment equipment systems segments.
"Most of the residents of China's cities live in high rise apartment buildings. Thousands of these buildings face water pressure issues that in turn affect the ability to get water to the upper floors of the buildings. We expect that these issues will grow as the country's urbanization trend continues. Residential water supplies constantly deal with water purity issues and the ability to provide constant disinfectant to prevent bacteria growth in the pipelines. Yuan Jie Water's products have enormous potential to provide necessary additional treatment and more reliable supply of potable water to building residents.
"We expect this acquisition to contribute to a new stream of sustainable profit for Tri-Tech Beijing. For this new operating segment, Yuan Jie Water will provide purification, pressurization, water treatment and recycling of various residential water systems.
"The acquisition of Yuan Jie Water will strengthen Tri-Tech's value chain and will play an important complementary role in down streaming our operations closer to end users. Tri-Tech gains Yuan Jie Water's building water supply systems know-how while providing new access to extensive applications of their technologies, thereby creating additional business opportunities.
"Yuan Jie Water has an excellent reputation and rich experience in project implementation with a well-established customer base. We regard Yuan Jie Water as the industry-leader in technology and management skills in this important industry segment. Combining our mutually successful experience and our respective management, technology and marketing capabilities will lead to a complementary, win-win relationship," Mr. Zhao said.
Ms. Xiuying Zhao, General Manager of Yuan Jie Water, said, "Yuan Jie Water is delighted to be allied with Tri-Tech, which has years of accumulated development, strong resources, a good customer base, effective marketing capabilities, financial strength and a proven and well established public company management system. Yuan Jie Water will benefit from these advantages and commit as always to providing our dedicated efforts in building water supply system integration, water treatment equipment, low-energy consumption, low-cost drinking water, wastewater treatment and water resources integration. These solutions will help us provide healthy drinking water in China's growing tier two and tier three cities. Yuan Jie Water is positioned to be an innovation-oriented, sustainable company with a strong competitive edge in the building water industry."
Background Information
With years of fast development driven by industrialization and urbanization, China's worsening water pollution situation, exacerbated by inadequate water treatment facilities and outdated sewage and water supply systems, water tanks and related facilities, means that most residential water does not currently meet national standard GB5749-2007 for drinking water. At the same time, the general public is placing increasing emphasis on improving drinking water quality and environmental awareness.
China's urban water supplies, regardless of usage, share a single water supply pipe network. The mixture of drinking water with other water has resulted in a serious waste of water resources and a significant increase in water treatment costs. Building water is a potential major supply point for usable water. Currently, untreated wastewater discharged from buildings pollutes rivers, lakes and soil and increases the operational burden of wastewater treatment plants that lack pre-treatment facilities. Improvement in the quality of China's water supply and comprehensive water reuse improvement are now leading national priorities, resulting in market opportunities for Tri-Tech. The market for improving residential water is both broad and urgent. The building water system integration business scope includes residential pressurized water supply, fire hydrant water, swimming pool water, softened water, air-conditioning water and sewage treatment. The building water system integration is crucial to improved water quality and water reuse. Only when water usage and circulation challenges are solved can the larger problems of water resource and water shortage be satisfactorily addressed.
Source:PRNewswire