Chinese company wants to buy Michelangelo painting for $75 million

A Chinese building products company called Yulong Eco-Materials Limited has decided to change its name and c...

Posted: Nov 24, 2018 2:45 PM
Updated: Nov 24, 2018 2:45 PM

A Chinese building products company called Yulong Eco-Materials Limited has decided to change its name and corporate strategy so it can focus on buying pieces of fine art instead.

Yulong said Friday that it will now be now known as Millennium Fine Art Limited. Earlier this week, the company announced an agreement to buy Michelangelo's Crucifixion painting for $75 million, using restricted shares of its stock for the deal.

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Although the deal is still contingent on an appraisal of the painting and verification of documents from the seller -- a descendant of Italy's famous Medici family -- shares of Yulong (YECO) surged more than 25% Monday on news of the purchase.

The stock has soared more than 250% in the past three months as the company has shifted its focus from recycled bricks and concrete to art. In August, Yulong announced plans to purchase the Millennium Sapphire, a 61,500 carat gem, for $50 million. The deal closed last month.

The company hasn't said why they decided to change its business, but sales have fallen in the past few years and Yulong had been losing money.

Shifting from building materials to art is an odd strategy to be sure. But it's one that the Cayman Islands-incorporated company, which had been located in the city of Pingdingshan, China and has since moved its headquarters to New York, hopes will pay off.

Daniel McKinney, the executive chairman of Yulong, said in a press release that "we are absolutely thrilled and delighted to have the chance to acquire this very rare Michelangelo masterpiece."

He touted that by buying YECO stock, "the general public can have fractionalized ownership of a collection of extremely valuable art treasures that until now have been restricted to billionaires, museums and royalty."

That's technically true. When you buy a stock, you have an ownership stake in the company that issues those shares. But it's not like average investors will get to put the Michelangelo painting on the wall in their living room.

It's no different than owning the stock of any public company. If you own shares of Disney for example, that doesn't mean you'll get to see scripts and early screenings of the next Star Wars movie like CEO Bob Iger can.

Still, this could be just the beginning of a series of art deals for Yulong. And the company also hopes to take some of its works on tour in order to maximize the profit potential.

To that end, Yulong CEO Hoi Ming Chan has already said the company wants to bring the Millennium Sapphire to museums around the world, make a television documentary about it, and also let film studios use the gemstone in movies.

Yulong even said it hopes to make mobile augmented reality games based on the museum tours, similar to the Pokemon Go mania that swept the world a few years ago.

The company was not immediately available for further comment about these ambitious plans. But Yulong needs to get its regulatory house in order if it hopes to remain listed in the US.

The company disclosed Friday that it has failed to file its latest annual report with Nasdaq, which means that shares could be delisted from the exchange.

CEO Chan said in a release Friday that the company plans to finish an audit and make its filing "as soon as possible."

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