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Cango Paves Way For Takeover By Agreeing To Sell China-based Business
CANGCango(CANG) Benzinga·2025-04-07 13:57

Core Viewpoint - Cango Inc. is transitioning from a car trading business to a bitcoin mining operation, highlighted by the recent 352millionsaleofitsChina−basedbusinesstoUrsalphaDigitalLtd.Thismoveispartofabroaderstrategytoshiftcontrolofthecompanyandadapttotheevolvingmarketlandscape[1][2][3].Group1:BusinessTransformation−CangohasagreedtosellitsoriginalChina−basedbusinessfor352 million sale of its China-based business to Ursalpha Digital Ltd. This move is part of a broader strategy to shift control of the company and adapt to the evolving market landscape [1][2][3]. Group 1: Business Transformation - Cango has agreed to sell its original China-based business for 352 million, with an upfront payment of 211millionandtheremainderininstallmentsbasedontaxobligations[2].−ThesaleisasignificantstepinresponsetoaproposalfromEnduringWealthCapitalLtd.totakecontrolofCango,indicatingthecompany′sseriousconsiderationofthisproposal[3].−Thecompanyhasbeende−emphasizingitscartradingbusinessduetochallengesintheChinesemarket,includingoversupplyandweakdemand,whichledtoadeclineinrevenue[6].Group2:FinancialPerformance−Cangoinvested211 million and the remainder in installments based on tax obligations [2]. - The sale is a significant step in response to a proposal from Enduring Wealth Capital Ltd. to take control of Cango, indicating the company's serious consideration of this proposal [3]. - The company has been de-emphasizing its car trading business due to challenges in the Chinese market, including oversupply and weak demand, which led to a decline in revenue [6]. Group 2: Financial Performance - Cango invested 250 million in cryptocurrency mining equipment and began operations in November, generating 933.8 bitcoins and recording 653 million yuan ($90 million) in revenue from mining in the fourth quarter of last year, which accounted for over 80% of its total revenue during that period [7]. - The company's shares have doubled in value over the past six months since announcing its transition to bitcoin mining, reflecting positive market sentiment towards this strategic shift [8]. Group 3: Future Prospects - Following the sale of its China-based business, Cango may relocate its headquarters from Shanghai to another country to mitigate risks associated with its bitcoin mining operations, as cryptocurrency mining is illegal in China [5]. - The current control of Cango rests with co-founders Zhang Xiaojun and Lin Jiayuan, who hold 45% of the shares and 92.5% of the voting power, but their future roles remain uncertain if control is transferred to Enduring Wealth Capital [4].