On the verge of delisting, Ruisi Education and charging service provider NaaS "marriage"

Reporter | Cha Qinjun

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Ruisi Education, which is on the verge of delisting, has grasped a life-saving straw - entering the field of electric vehicles through mergers and acquisitions.

On the evening of February 8, Reth Education (NASDAQ:REDU) announced that it has reached a final merger agreement with Dada Auto Inc. (hereinafter referred to as NaaS), a provider of electric vehicle charging infrastructure and integrated operating solutions, in which NaaS shareholders will exchange all of NaaS's issued share capital for the newly issued shares of Ruisi Education.

Upon completion of the transaction, NaaS will become a wholly owned subsidiary of Ruisi Education, and the transaction is expected to close around the middle of this year.

The equity values of NaaS and Ruisi Education in this transaction are about US$587 million and US$45 million, respectively. Upon completion of the transaction, the existing NaaS shareholders and the existing Ruisi Education shareholders will hold approximately 92.9% and 7.1% of the outstanding shares of the combined company, respectively.

Before reaching this deal, Ruisi Education was in the "deep water". On the one hand, Nasdaq's delisting warning; on the other hand, due to the sale of all its assets in China, the divestiture from listed companies and overseas capital, Ruisi Education was questioned as a "shell company".

Ruisi Education is also experiencing frequent personnel changes. On January 6, Ruisi announced that Sun Yiding and Yong Chen resigned as vice chairman and independent director respectively for personal reasons.

As of June 30, 2021, Ruisi Education's revenue for the second quarter of 2021 was 257 million yuan, an increase of 55.6% year-on-year; the net loss was 52.662 million yuan, a loss narrowed by 9.3% year-on-year.

This "marriage" has been rumored before. On January 6, the Board of Directors of Ruisi Education received a non-binding proposal for an electric vehicle company that would contribute to the electric vehicle ecosystem business in exchange for newly issued shares. The two sides agreed to negotiate exclusively for 28 days from January 17.

Dada Auto Inc. is an operational and technical provider serving China's EV charging market, providing hardware, software and technical services and solutions to charger operators and working with all members of the EV charging value chain, according to the announcement.

For the merger, Wang Lihong, chairman and CEO of Ruisi Education, said in the announcement: "Dada Auto has a strong management model and a proven business model, and this combination will bring great value to investors and shareholders. ”

Cathy Wang, CEO of Dada Auto Inc., also said: "In the past two years, with the booming electric vehicle market in China, the company has achieved tremendous growth and entered the capital market, and the combined company will drive this growth trend."

China is currently the world's largest market for electric vehicles. In 2021, new sales of electric vehicles in China will be 3.4 million, accounting for about 52% of new global electric vehicle sales, and the Chinese market will account for about 47% of global electric vehicle sales. With the rapid growth of electric vehicle ownership and policy support, China's electric vehicle charging infrastructure will also develop rapidly. In 2020, China accounted for about 62% of the 1.3 million public charging rods in the world.

Boosted by the merger news, Ruisi Education's pre-market share price rose by more than 14% at one point, but soon after the opening, the stock price turned green. As of the close of trading on February 8, Eastern Time, Ruisi Education reported $0.464 per share, down 8.48%, with a total market value of $26.2137 million.