Gelonghui September 28?Daphne International (00210.HK) announcementOn September 28, 2023, the company (as buyer), the seller (Great Pacific Investments Ltd) and the guarantor (as the seller's guarantor) enter into a sale and purchase agreement whereby, and subject to its terms and conditions, the company has conditionally agreed to purchase and the seller has conditionally agreed to sell the sale shares, which is equivalent to the target company.Fortune international co., Ltd.(the company's direct non-wholly-owned subsidiary) the total issued shares are about 40.04%, with a consideration of RMB 42.5 million.
Upon completion, the target company will become a direct wholly-owned subsidiary of the company.The target company is an investment holding company. Its subsidiaries are engaged in footwear product distribution and licensing business as well as trademark holding in China.
As indicated by the consolidated income and profits of the target company in the past two financial years, the business was seriously affected by the COVID-19 epidemic and the relevant epidemic prevention and control measures taken by the Chinese government. As a result, the seller has been seeking potential buyers for the sale of shares. After negotiations on the principle of fairness, the seller and the company reached an agreement on a mutually acceptable price, which is discounted from the consolidated net asset value of the target company and is in line with the valuation of the sales shares in the valuation report.
The Company believes that despite the setbacks of the business during the epidemic, with the Group's expertise in the footwear distribution and licensing industry in the PRC and contacts with downstream retail channels, the Company has the ability to revitalize the business and its brand, and to create potential synergies and / or other business opportunities through merger and coordination with other brands and sales channels of the Group. Therefore, the company believes that the business and its brand still have good prospects.
The company also considers it feasible to acquire 100% of the target company because it allows the group to merge and coordinate the business with other businesses of the group and take advantage of the cumulative tax credit for the target company and its subsidiaries, which is impossible for the target company to have 40% minority shareholders.