Dragonite International Limited, and its wholly-own subsidiaries, has sold its E-Vapor Business for $75 million to Fontem Ventures B.V., a wholly-owned subsidiary of Imperial Tobacco Group plc. (ITG), a global tobacco company with international strength in cigarettes and world leadership in fine cut tobacco, papers and premium cigars.
Fontem Ventures B.V. was established by ITG to develop non-tobacco products, including electronic vapor products. ITG employs approximately 36,000 staff members and sells its products in more than 160 countries around the world.
The $75 million payable for the assets is the aggregate of the Initial Purchase Price of $50 million and the Deferred Purchase Price of $25 million in aggregate.
The sellers include Ruyan Investment (Holdings) Limited, Shenyang; SBT Technology and Development Co. Ltd., Beijing; Ruyan Technology & Development Co. Ltd. and Beijing; SBT Ruyan Technology & Development Co. Ltd, all wholly-owned subsidiaries of Dragonite.
These sellers have agreed to sell:
• the benefit of the contract
• the Business Intellectual Property Rights;
• the Information;
• the benefit of the Claims (including any settlement agreements); and
• all records and other documents relating to the assets
The Business Intellectual Property Rights comprises all of the Intellectual Property Rights owned by the Sellers and used in connection with the business, including but not limited to a wide range of patents and patent applications, registered trade marks and trade mark applications (in each case in a number of different jurisdictions around the world) and registered domain names. The Claims are legal proceedings brought by the Sellers in the U.S. and China for infringement of the group’s patents included in the Business Intellectual Property Rights. The Assets did not form part of the assets included in the Ruyan atomizing cigarettes segment as shown in the Dragonite’s annual report for the year ended Dec. 31, 2012. The assets included in that segment, such as inventory, receivables and advance payments, are not being disposed of and are therefore not included in the sale.
Dragonite had conducted a competitive sale process in which offers for the acquisition of the E-Vapor Business were solicited from several different potential purchasers.
Dragonite International Limited was formerly known as “Ruyan Group (Holdings) Limited.” Prior to consolidation of the company under the Ruyan banner in 2007, the company was operating as a health care and pharmaceutical products company known as the Golden Dragon Group. The electronic cigarette business, including the SBT (“Substitute for Tobacco”) group, which had been operating as an affiliate of Golden Dragon, was then consolidated into the listed company and the name was changed to “Ruyan Group (Holdings) Limited” in November 2007 with three major business divisions: health care, pharmaceutical and electronic cigarettes.