UPDATE: Cogo Chair, CEO Kang Proposes to Purchase 30.4% of Co. Net Assets

 Cogo Group, Inc. ("Cogo," or the "Company") COGO, a leading gateway for global semiconductor companies to access the industrial and technology markets in China, today announced that its founder, CEO and Chairman, Jeffrey Kang, submitted a proposal to the Cogo Board of Directors for the purchase of approximately 30.5% of Cogo's net assets, which as of the first quarter of 2013, generated approximately 98.7% of Cogo's revenues through a company he wholly owns, Brilliant Group Global Limited ("Brilliant Group"). The proposed purchase price is US$80 million. Mr. Kang has proposed that the transaction close before the end of 2013. Since this is a related-party transaction, the Board of Directors has delegated the review and negotiation of the potential transaction to the Company's Audit Committee, which is comprised of three independent directors. The Audit Committee is expected to oversee the entire process. In accordance with the Company's organizational documents, the Company anticipates that it will hold a meeting of stockholders to approve the transaction if the transaction is approved by Audit Committee. As a condition of the proposed transaction, Brilliant Group would be required to pay $750,000 to Cogo on a quarterly basis for Cogo's remaining subsidiaries and the target companies to continue to provide cross guarantees to each other until the end of 2014. Consideration is proposed to be payable in 2 installments, of which $10 million would be payable on Closing and $70 million by the end of 2013. Upon completion of the transaction, Net Asset Value of Cogo shares is expected to be more than $6 a share. At the NASDAQ close on July 12, 2013, Cogo's share price was $2.05 a share. Based on Cogo's Q1 2013 unaudited results as filed on Form 6-K on May 31, 2013, the proposed target assets represent approximately 30.5% of the Company's net assets, 98.7% of its revenues and 66.5% of its gross profit. A portion of the proceeds of the sale will be reserved for Cogo's buyback program. There are more than 3.6 million outstanding shares under Cogo's current buyback program authorized for repurchase out of the original 10 million shares. Management plans to authorize another plan to repurchase up to 10 million shares upon completion of the current program. As of July 12, 2013, there are approximately 29.4 million outstanding shares, of which insiders own approximately 40.8%. The Company will continue to disclose all material information relating to the proposed transaction in order to be able to continue to execute buyback program in accordance with applicable securities law requirements. "This proposed deal is set to maximize shareholder value, and I am excited about what it means for our shareholders," said Mr. Kang. "Upon the completion of this deal, Cogo is estimated to have more than $140 million net cash based on Q1's financials and other assets, and a small amount of higher margin services and system solution revenue. The deal will help the Company evolve into a light asset, service revenue oriented business. The Company has no intention to dissolve or go private. The plan is to maintain the Company's listing position with a business focus that aims to create greater value for shareholders."