A China subsidiary of Q&M Dental Group (Singapore) has signed a framework agreement with Dr Sun Zhizong to acquire a 60 per cent stake in a management company that will own and operate two dental hospitals in Donggang City and Dandong City in the Liaoning Province of China.
Under the deal, which is valued at 30 million yuan (S$6 million), Dr Sun will incorporate a management company and inject the dental businesses and assets of both hospitals into the management company.
Q&M will then acquire 60 per cent of the management company.
It will fund the acquisition through internal cash, existing loans from World Bank's International Finance Corporation and new Q&M shares, if need be.
Dr Sun's two dental hospitals are estimated to collectively have a net tangible asset of seven million yuan.
He currently employs over 40 dentists and more than 60 nurses and support staff.
Q&M will also receive a profit guarantee from Dr Sun starting from three million yuan per year from 2014 and increasing by 9 per cent compounded growth every year for 12 years until 2026.
Dr Sun, who holds the remaining 40 per cent, will remain in the management team with a 12-year employment contract.