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Legend Aims for IT Leadership
China's leading IT company Legend Group spent US$35.37 million Wednesday to acquire Yestock.com in a attempt to further tap China's fledging Internet market and make the firm the leading Chinese company in the sector.
The multi-million dollar acquisition is made up of US$16 million cash, US$13 million in Legend stocks and US$6.2 million worth equipment. It has enabled Legend to become the largest single investor in Yestock.com after acquiring a 40 per cent stake in the top-notch website which focuses on financial information services.
This is the biggest step so far taken by Legend since it set up a Chinese-language portal site, www.FM365.com, in April this year, according to experts.
In March, Legend collected up to 3 billion yuan (US$361.45 million) from the Hong Kong stock market. It planned to use 700 million yuan (US$84.34 million) to boost its Internet business.
Legend has just received a licence allowing it to offer nationwide ISP (Internet Service Provider) services.
Some insiders believe that, with both a ICP (Internet Content Provider) and a ISP business, Legend could become a formidable rival even to China Telecom, the country's dominant telecom operator. Unlike those newly established dotcoms, Legend has plenty capital, strong branding and prime market strength, according to experts.
And Legend also has at least one thing others don't have -- a fast growing computer user base. Legend is China's largest computer manufacturer with annual production of more than 1 million units. It has pre-installed Internet access on its home-use computers.
"Legend plans to increase its annual revenue from the present US$3 billion to US$10 billion in 2005. We have to be a leader in China's information services sector," said Legend President Liu Chuanzhi.
The takeover of Yestock.com is just one of the steps Legend has taken to improve the content of its portal site and to boost sales of its mobile electronic devices.
According to Yang Yuanqing, Legend's vice-president and chairman of the new Yestock.com, Yestock.com will provide financial information and stock transaction services for Legend's palm-size computer users. It will also offer Legend's paging device buyers real-time stock information. Yestock.com will also supply information for FM365.com's financial channel.
A Legend executive indicated that similar acquisitions will be made in coming months and the next focus will be on the education sector.
Liu Bo, president of Yestock.com, denied the takeover by Legend was a result of financial difficulties.
But he admitted Legend's participation will certainly bring in the huge amount of cash Yestock.com needs to expand. (China Daily)
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