GUANGZHOU - Viomi Technology Co., Ltd (NASDAQ: NASDAQ:VIOT), a company specializing in IoT-enabled smart home products, announced today that it has agreed to sell certain segments of its IoT@Home portfolio to its Founder and CEO, Mr. Xiaoping Chen, for RMB65 million. The divestiture is part of Viomi's strategy to concentrate on its home water solution business.
The transaction involves the sale of IoT@Home portfolio products, excluding range hoods, gas stoves, and water heaters, to Mr. Chen. This will be accomplished by terminating existing contractual arrangements with Foshan Yunmi Electric Appliances Technology Co., Ltd., resulting in Mr. Chen gaining full control over Foshan Viomi and its subsidiaries.
As part of the deal, Mr. Chen will inject the purchase price into Guangzhou Interconnect Technology Co., Ltd. as a registered capital increase, which will be controlled by Viomi post-restructuring. This internal reorganization is expected to complete by the end of August 2024, subject to customary closing conditions.
The company's board, guided by a special committee of independent directors and advised by Kroll LLC, has unanimously approved the transaction, deeming it beneficial and financially fair to Viomi. Post-sale, Viomi aims to use AI technology to enhance its offerings in the home water solutions market.
This move reflects Viomi's dedication to refining its product lineup and focusing on areas where it sees strategic growth potential. It is a significant shift for the company, which has previously maintained a broad array of IoT products for the home.
This announcement is based on a press release statement from Viomi Technology Co., Ltd and contains forward-looking statements subject to risks and uncertainties. The company's future plans and expectations are outlined in their filings with the SEC, which detail the various factors that could influence actual outcomes.
InvestingPro Insights
As Viomi Technology Co., Ltd (NASDAQ: VIOT) navigates through its strategic refocusing, the company's financial health and market performance remain pivotal for investors. Notably, Viomi holds more cash than debt on its balance sheet, indicating a solid liquidity position that may support its transition towards specializing in home water solutions. This move could be seen as a proactive step to leverage its financial stability and concentrate on a niche market.
The company's commitment to this new direction is further underscored by the recent aggressive share buybacks, as management seems confident in the firm's value proposition and future prospects. Share repurchases often signal a belief from management that the company's stock is undervalued, providing a potential opportunity for investors.
In terms of market performance, Viomi's shares have seen a significant return over the last three months, with a 72.27% increase. This rally could reflect investor optimism about the company's strategic initiatives and future growth potential in the home water solution sector.
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