Corporate News Blog - Acorn International Sells Majority Stake in HJX Business
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LONDON, UK / ACCESSWIRE / August 14, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Acorn International Inc. (NYSE: ATV) ("Acorn"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=ATV. The Company announced on August 11, 2017, that it entered into an agreement to sell its majority stake in the HJX business to a third-party investor and operator. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Creation of a Joint Venture
The agreement comprises of the creation of a joint venture that will be controlled and operated by a third party. As per the agreement, the joint venture will help liquidate the large stock of HJX inventory and Acorn will transition certain expenses on a pro-rata basis to the joint venture. Also, the third-party team will now become responsible for the day-to-day operational management of the HJX business. As per the Company's press release, the joint venture is expected to be operational in the coming months. A clear date has not been specified.
Acorn to Focus on its Profitable Businesses and Brands
The HJX business of Acorn primarily focuses on direct sales of Ozing branded electronic learning devices with mobile internet interactive features, such as online tutoring services. The partial divestiture of this business unit will relieve Acorn from the day-to-day management of this business. This, in turn, will help Acorn to emphasize on its already profitable businesses and brands, as well as on achieving profitable growth of new businesses within the Group.
In fact, Jacob Fisch, President of Acorn, mentioned that this joint venture marks one of Acorn's final key steps in turning around and restructuring the business away from loss-making legacy businesses to focus more closely on its brands and business areas that support its mandate for profitable growth.
Robert Roche, the Executive Chairman of Acorn, also had similar views. He stated that the agreement with HJX signifies a positive move for Acorn as the Company realigns its strategy and focuses on businesses that drive profitable growth.
Transaction Driven by Decline of Educational Tablet Market
Jacob Fisch shared that the weak overall market environment for electronic learning products in China has been the key driver for this transaction.
He stated that it is a good move for Acorn and signifies a very solid deal for the Company within the context of the overall market environment for electronic learning products. The HJX business has struggled over the last few years despite the history and continuing strength of the Ozing brand in China. This challenge can primarily be attributed to the ongoing secular decline of the specialized educational tablet market, as well as its inability to innovate fast enough around new software development. Acorn had been exploring and evaluating alternative strategic solutions for HJX for a year now. It also considered efforts to turn the business around with internal resources. However, the Company decided that the divestiture was the best option for the business at this point in time.
About Acorn International Inc.
Robert Roche, who now serves as the Executive Chairman, co-founded Acorn in 1998. Acorn is a marketing and branding Company in China with a proven track record of developing, promoting, and selling a diverse portfolio of proprietary-branded products, as well as well-established and promising new products from third parties. It's business currently includes two main divisions, its direct sales platforms and its nationwide distribution network.
Last Close Stock Review
At the closing bell, on Friday, August 11, 2017, Acorn Intl.'s stock was marginally up 0.80%, ending the trading session at $12.60. A total volume of 7.63 thousand shares have exchanged hands, which was higher than the 3-month average volume of 5.59 thousand shares. The Company's stock price skyrocketed 10.53% in the last three months, 40.00% in the past six months, and 113.56% in the previous twelve months. Moreover, the stock soared 57.50% since the start of the year. The stock is trading at a PE ratio of 30.00 and currently, has a market cap of $49.14 million.
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