Precision parts maker CDW Holding is selling part of its interest in a loss-making biotechnology subsidiary to the son of its controlling shareholder, in a surrender of its majority stake.
Tomoike Industrial (HK), a wholly owned CDW unit, inked a deal on Thursday to divest 32.94 per cent of South Korean life-science firm A Biotech (ABio) to Mr Koichi Yoshimi for 2.95 billion won (S$3.6 million) in cash, according to an announcement.
CDW held 82.36 per cent in ABio before the deal.
Under the transaction agreement, Tomoike also has the option, but not an obligation, to buy up to 140,000 shares in ABio from Mr Yoshimi - whose father owns 50.51 per cent of CDW - for five years after a proposed initial public offering.
It will pay 85 per cent of whatever the ABio market share price is at the time that it gives notice of exercising the option.
Proceeds from the proposed disposal will be used entirely for working capital purposes, CDW said, adding that the sale consideration is worth about twice as much as the net asset value attributable to the shares, based on unaudited management accounts as of June 30.
No valuation was commissioned for the disposal, with negotiations based instead on valuations from an initial share issue to seven third-party subscribers in June, including ABio management.
The payment will be made in three tranches, with the last one due by Oct 31 next year.