Gelonghui September 28th 丨Daphne International (00210.HK) announcement,On September 28, 2023, the company (as the buyer) and the seller (Great Pacific Investments Ltd) and the guarantor (acting as the seller's guarantor) enter into a sales agreement. Based on this and subject to its terms and conditions, the company has conditionally agreed to buy and the seller has conditionally agreed to sell shares, which is equivalent to the target companyFu Zhen International Co., Ltd.(The company is not directly a wholly-owned subsidiary) Approximately 40.04% of all issued shares at a cost 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 and trademark ownership in China.
The target company's comprehensive revenue and profit for the past two financial years showed that the business was seriously affected by the COVID-19 pandemic and the relevant epidemic prevention and control measures taken by the Chinese government. As a result, sellers have been seeking potential buyers in connection with the sale of shares. After negotiations on the principle of fairness, the seller and the company reached an agreement on a price acceptable to both parties. This price was discounted from the comprehensive net asset value of the target company and was consistent with the valuation of the shares sold in the valuation report.
The company believes that despite setbacks in the business during the pandemic, with the Group's expertise in the footwear distribution and licensing industry in China and links with downstream retail channels, the company has the ability to revitalize the business and its brand, and create potential synergies and/or other business opportunities through mergers and coordination with other brands and sales channels of the Group. As a result, the company believes the business and its brand still have good prospects.
The company also believes that it is feasible to acquire 100% of the shares in the target company, because this allows the group to merge and coordinate the business with the rest of the group's businesses and use the target company and its subsidiaries to accumulate tax credits, which is impossible to achieve since the target company has 40% minority shareholders.