500.com has entered into a deal with Blockchain Alliance, under which it will issue 44,353,435 new Class A ordinary shares to acquire all the shares of Blockchain Alliance. This transaction represents approximately 10% of 500.com’s overall share capital and is expected to be finalized by 15 April, 2021.
Blockchain Alliance’s flagship product, BTC.com, provides services such as cryptocurrency mining pool services, cryptocurrency wallets, and information about cryptocurrencies.
In addition to the initial share payment, 500.com may issue additional shares if BTC.com’s mining pool business generates a net operating profit in the fiscal year ending 31 December, 2021. The maximum number of additional shares will be 22,176,718 if the profit exceeds $20m. However, if BTC.com incurs a loss during the year, 500.com has the option to repurchase shares from the initial payment at a price of $0.00005 per share. The number of shares available for repurchase will depend on the magnitude of the loss, capped at 10% of the shares for losses equal to or exceeding $10m.
This deal showcases 500.com’s efforts to establish its presence in the cryptocurrency sector. The company appointed Xianfeng Yang as its new chief executive in January, who brings previous experience in the cryptocurrency industry. Moreover, 500.com acquired a majority stake in Loto Interactive in January, increasing its ownership from 33.7% to 54.2%. To further strengthen its position, the company announced its plan to acquire approximately $14.4m worth of Bitcoin mining machines and later agreed in February to purchase an additional 15,900 machines from two different sellers. As a result, 500.com’s share price has surged significantly, with a 66.8% increase from $20.00 to $33.35.
Currently, the shares of 500.com are trading at $30.43.
