Stock in Chinese electrical appliances company Gome fell as much as 6.9 per cent after it agreed to pay Rmb900m to its founder for a social data company that lost almost Rmb100m last year.
Gome said in a filing to the Hong Kong Stock Exchange on Tuesday it had agreed to buy 60 per cent of the registered capital of Meixin Network Technology Company Limited, the company behind the eponymous Gome Plus social shopping platform.
The controlling stakeholder of Meixin was given in the filing as Wong Kwong Yu – the Cantonese rendering for the name of Gome founder Huang Guangyu. Mr Huang was jailed in 2010 for 14 years for insider trading, bribery and illegal dealings.
In the filing Gome said ownership of a data-platform company “is indispensable for the Group as it builds its own specialised consumer database, and works to gain deeper understanding of consumption psychological thinking and behaviour”.
It also disclosed that Meixin had reported a loss of Rmb97.3m for the 2016 financial year and faced a deficit of Rmb229.5m as of December 31.
Shares in Gome fell as much as 6.9 per cent in morning trade before pulling back to be down 5.9 per cent at HK$0.96 as the morning session closed. The benchmark Hang Seng Composite Index ended the morning up 0.4 per cent.
Get alerts on China when a new story is published