SINGAPORE (Jan 11): HRnetGroup is expanding its core business of recruitment services into China.

The group has entered into a binding term sheet to acquire 51% of the shares in REForce (Shanghai) Human Resources Management Consulting Co.

HRnetGroup and REForce has agreed to make the acquisition an all-cash deal where 10%, 45% and 45% of the consideration will be calculated with respect to the financial years ending Dec 31 2017, 2018 and 2019 respectively.

"In each of the financial years, the relevant proportion of the consideration will be calculated based on a tiered price-earnings multiple as agreed between the parties of the actual net profit after tax of REForce for that financial year, subject to a minimum level of net profit," says HRnetGroup in its filing.

In the event that REForce does not achieve the minimum agreed level of NPAT by a variance of 5% or more for two straight years, HRnetGroup is entitled to terminate the acquisition and to require the REForce's partners to purchase its shares.

In addition, HRnetGroup will extend a RMB 3 million ($0.6 million) shareholders’ loan to REForce for operation and expansion purposes.

REForce and its affiliates will also enter into employment contracts and non-compete agreements where they will undertake not to compete with the business of the Group.

The board of directors of REForce will also be composed of three directors, two of whom will be appointed by HRnetGroup.

Shares in HRnetGroup closed 2 cents lower at 83 cents on Thursday.