On June 7, 2024, the Board of Directors of China Resources Pharmaceutics (03320.HK) passed a resolution and approved that the company's non-wholly-owned subsidiary, China Resources Sanjiu (000999.SZ), and KPC Pharmaceuticals (600422.SH) will enter into an equity transfer agreement ('Equity Transfer Agreement'). As a result, China Resources Sanjiu will agree to sell and KPC will agree to acquire a 51% stake in Kunming China Resources Shenghuo Pharmaceutical Co., Ltd. ('China Resources Shenghuo') for a total consideration of RMB 1.791 billion ('Proposed Inner Restructuring').

As of the date of this announcement, China Resources Shenghuo is fully owned by China Resources Sanjiu and is accounted for as a non-wholly-owned subsidiary of the company, with the company owning approximately 63.00% stake. After the Proposed Inner Restructuring is completed, it is expected that the company's stake in China Resources Shenghuo will be diluted from approximately 63.00% to approximately 39.88%, while China Resources Shenghuo will remain a non-wholly-owned subsidiary of the company.

The announcement stated that the Proposed Inner Restructuring will help implement the company's '14th Five-Year Plan' strategic planning, optimize industrial chain layout, promote high-quality development of the Sanqi industry chain, further enhance the influence of China Resources Sanjiu in the Sanqi industry, and solve the problem of inter-industry competition between China Resources Shenghuo and KPC's Xuesaitong soft capsule products. The company believes that the Proposed Inner Restructuring will give full play to the advantages of China Resources Sanjiu and KPC in product, sales and distribution network, brand, supply chain, and create synergy value. At the same time, it is expected that the Proposed Inner Restructuring will help accelerate the integration of Sanqi supply chain, build an industry benchmark, further enhance the market penetration and influence of the group's Sanqi products, and better promote the high-quality development of the traditional Chinese medicine industry chain represented by Sanqi products, laying a solid foundation for the overall performance growth of the company.