Kingsoft Makes $296M Investment in 21Vianet Group (VNET)
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21Vianet Group (NASDAQ: VNET) announced that affiliates of Kingsoft Corporation Limited, a leading internet based software developer, distributor and service provider, Xiaomi Corporation ("Xiaomi"), a leading designer, manufacturer and marketer of mobile devices and other electronic equipment and a provider of internet services, and Temasek, a Singapore based investment company, have entered into definitive share purchase agreements with 21Vianet. All shares to be issued in these transactions are newly issued shares of 21Vianet.
Pursuant to the agreement with Kingsoft entered into on November 29, 2014, Kingsoft agrees to make a total of US$172 million investment in 21Vianet, with a purchase price of US$3.00 per ordinary share (the equivalent of US$18.00 per ADS). The investment will all be in newly issued 39,087,125 Class A and 18,250,268 Class B ordinary shares. Immediately after the closing of the transactions with Kingsoft, Xiaomi and Temasek, respectively, Kingsoft will hold approximately 11.6% equity ownership in 21Vianet, representing approximately 19.9% of the voting power. Kingsoft will have the right to nominate one director to 21Vianet's board of directors.
Pursuant to the agreement with Xiaomi entered into on November 30, 2014, Xiaomi agrees to make a total of US$50 million investment in 21Vianet, with a purchase price of US$3.00 per ordinary share ( the equivalent of US$18.00 per ADS). The investment will all be in newly issued 6,142,410 Class A and 10,524,257 Class B ordinary shares. Immediately after the closing of the transactions with Kingsoft, Xiaomi and Temasek, respectively, Xiaomi will hold approximately 3.4% equity ownership in 21Vianet, representing approximately 10.0% of the voting power. Xiaomi will have the right to nominate one director to 21Vianet's board of directors.
Pursuant to the agreement with Temasek entered into on December 1, 2014, Temasek agrees to make a total of US$74 million investment in 21Vianet, with a purchase price of US$3.00 per ordinary share (the equivalent of US$18.00 per ADS) . The investment will be in newly issued 24,668,020 Class A ordinary shares, or the equivalent of 4,111,337 ADSs. Immediately after the closing of the transactions with Kingsoft, Xiaomi and Temasek, respectively, together with its existing equity ownership, Temasek will hold approximately 13.1% equity ownership in 21Vianet, representing 5.8% of the voting power.
Upon the consummation of the investment contemplated under the share purchase agreement with Kingsoft, 21Vianet and Kingsoft will sign a business cooperation memorandum. Under the terms of the memorandum, 21Vianet will build, operate, maintain and provide technical support for new, state-of-art data centers in China to meet Kingsoft and its designated third party's next-generation cloud infrastructure requirements. Upon meeting certain conditions, 21Vianet will lease to Kingsoft and its designated third party (agreed to by 21Vianet) a combined minimum of 5,000 cabinets over the next three years.
"We welcome the new strategic investments by Kingsoft and Xiaomi and the additional investment by Temasek," said Mr. Josh Chen, co-founder, chairman and chief executive officer of 21Vianet. "We are very excited to see that Kingsoft and Xiaomi, leading global technology companies, share our vision and strategy in developing open-source technologies, cloud ecosystems and the next generation internet infrastructure in China. As we remain fully committed to the carrier-neutral, customer- neutral and cloud-neutral value proposition, we are confident that their investments offer significant strategic value in strengthening our core operations and expanding new business opportunities."
Mr. Shang Hsiao, Chief Financial Officer of 21Vianet stated, "By partnering with Kingsoft and Xiaomi, not only will we be able to expand the scale of our data center footprint, but we will also be able to develop the next-generation infrastructure platform, helping fuel the continued growth of mobile Internet traffic and cloud computing technology in China. Together, Kingsoft, Xiaomi and Temasek will be not only our strategic investors, but also our partners as we execute our business strategies, capture growth in the internet infrastructure market and generate shareholder value over the long term. The transactions are subject to the satisfaction of customary closing conditions, with the closing expected to occur in January of 2015."
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