Q & M Dental Group (Singapore) says unit Q & M Dental Group (China) has entered into a binding memorandum of understanding to set up a joint venture with the shareholders of Shenzhen New Perfect Exact Dental Research Co. (SZNP), Peng Hui Chang, Peng Jian Chang and Guo Yu Chun.

SZNP is a equity joint venture incorporated with investment from Taiwan, Hong Kong and Macau in China and focuses on the technology development, dental device materials research and the processing and manufacture of dental devices.

The registered capital of SZNP is HK$30 million ($5 million) and the shareholders have an indirect interest in the capital of SZNP through Shenzhen New Perfect Industry Co., Ltd. (NPI) and Chang Xin Industry (Hong Kong) Co., Ltd. (HKCX), each of which have an equity proportion of 71% and 29% respectively in SZNP.

Under the terms of the MOU, the shareholders will first procure NPI to transfer all of its 71% equity interest in SZNP to HKCX, after which HKCX will be the sole shareholder of SZNP. The shareholders shall then sell 49% of their shares in HKCX to Q & M Dental Group (China), after which the latter should have a 49% interest in SZNP and its subsidiaries.

Q & M Dental Group (China) will pay RMB98 million ($19.21 million) for the 49% stake in HKCX with RMB60 million in cash and RMB38 million in Q & M Dental Group (Singapore) shares, subject to a lock-up period of five years.