v3.25.1
Acquisition of Subsidiaries
 3 Months Ended
Mar. 31, 2025
Acquisition of Subsidiaries [Abstract]  
Acquisition of subsidiaries
12. Acquisition of subsidiaries

 

On July 20, 2021, CBAK Power entered into a framework agreement relating to CBAK Power’s investment in Hitrans, pursuant to which CBAK Power acquires 81.56% of registered equity interests (or representing 75.57% of paid-up capital) of Hitrans (the “Acquisition Agreement”). The transfer of 81.56% registered equity interests (representing 75.57% of paid-up capital) of Zhejiang Hitrans to CBAK Power has been registered with the local government and acquisition was completed on November 26, 2021.

 

Upon the closing of the Acquisition, CBAK Power became the largest shareholder of Hitrans holding 81.56% of the Company’s registered equity interests (representing 75.57% of paid-up capital of the Company). As required by applicable Chinese laws, CBAK Power and Management Shareholders are obliged to make capital contributions of RMB11.1 million ($1.7 million) and RMB0.4 million ($0.06 million), respectively, for the unpaid portion of Hitrans’s registered capital in accordance with the articles of association of Hitrans.  

The Company completed the valuations necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of goodwill was determined and recognized as of the respective acquisition date. The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed as of the closing date, November 26, 2021.

 

Cash and bank  $7,323,654 
Debts product   3,144 
Trade and bills receivable, net   37,759,688 
Inventories   13,616,922 
Prepayments and other receivables   1,384,029 
Income tax recoverable   47,138 
Amount due from trustee   11,788,931 
Property, plant and equipment, net   21,190,890 
Construction in progress   2,502,757 
Intangible assets, net   1,957,187 
Prepaid land use rights, noncurrent   6,276,898 
Leased assets, net   48,394 
Deferred tax assets   1,715,998 
Short term bank loan   (8,802,402)
Other short term loans – CBAK Power   (20,597,522)
Trade accounts and bills payable   (38,044,776)
Accrued expenses and other payables   (7,439,338)
Deferred government grants   (290,794)
Land appreciation tax   (464,162)
Deferred tax liabilities   (333,824)
Net assets   29,642,812 
Less: Waiver of dividend payable   1,250,181 
Total net assets acquired   30,892,993 
Non-controlling interest (24.43%)   (7,547,158)
Goodwill   1,606,518 
Total identifiable net assets   24,952,353 

 

The components of the consideration transferred to effect the Acquisition are as follows:

 

   RMB   USD 
Cash consideration for 60% registered equity interest (representing 54.39% of paid-up capital) of Hitrans from Meidu Graphene   118,000,000    18,547,918 
Cash consideration for 21.56% registered equity interest (representing 21.18% of paid-up capital) of Hitrans from Hitrans management   40,744,376    6,404,435 
Total Purchase Consideration   158,744,376    24,952,353 

 

The transaction resulted in a purchase price allocation of $1,606,518 to goodwill, representing the financial, strategic and operational value of the transaction to the Company. Goodwill is attributed to the premium that the Company paid to obtain the value of the business of Hitrans and the synergies expected from the combined operations of Hitrans and the Company, the assembled workforce and their knowledge and experience in provision of raw materials used in manufacturing of lithium batteries. The total amount of the goodwill acquired is not deductible for tax purposes and was fully impaired as of December 31, 2023.