Grand Baoxin Auto : Announcements and Notices - Connected Transaction Acquisition Of 100% ...

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

GRAND BAOXIN AUTO GROUP LIMITED

廣 匯 寶 信 汽 車 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1293)

CONNECTED TRANSACTION

ACQUISITION OF 100% EQUITY INTEREST

IN SHANGHAI GUANGHUI TENGDE AUTOMOTIVE SALES SERVICES

LIMITED

THE ACQUISITION

The Board is pleased to announce that on 12 September 2019 (after trading hours), the Vendor entered into the Sale and Purchase Agreement with the Purchaser, an indirect wholly-owned subsidiary of the Company, pursuant to which the Vendor has agreed to sell to the Purchaser, and the Purchaser has agreed to acquire from the Vendor, 100% equity interest in the Target for a consideration of RMB11.55 million (equivalent to approximately HK$12.59 million).

LISTING RULES IMPLICATION

As at the date of this announcement, the Vendor is wholly owned by CGA. CGA HK, the controlling shareholder of the Company, is indirectly held as to approximately 44.23% and 55.77% by the Vendor and CGA respectively. Accordingly, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As all the applicable percentage ratios in relation to the Acquisition are more than 0.1% but less than 5%, the Acquisition is subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement pursuant to Chapter 14A of the Listing Rules.

- 1 -

INTRODUCTION

The Board is pleased to announce that on 12 September 2019 (after trading hours), the Vendor entered into the Sale and Purchase Agreement with the Purchaser, an indirect wholly-owned subsidiary of the Company, pursuant to which the Vendor has agreed to sell to the Purchaser, and the Purchaser has agreed to acquire from the Vendor, 100% equity interest in the Target for a consideration of RMB11.55 million (equivalent to approximately HK$12.59 million).

THE ACQUISITION

The key terms of the Sale and Purchase Agreement are summarized as follows:

Date

12 September 2019

Parties

1. China Grand Automotive Services Co., Ltd.* (廣匯汽車服務有限責任公司), as the Vendor; and
2. Shanghai Baoxin Automobile Sales & Services Co., Limited* (上海寶信汽車銷售服務有 限公司), as the Purchaser.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Vendor has agreed to sell to the Purchaser, and the Purchaser has agreed to acquire from the Vendor, 100% equity interest in the Target.

- 2 -

Consideration

The consideration for the Acquisition is RMB11.55 million (equivalent to approximately HK$12.59 million) (the "Consideration"), and will be payable as follows:

Time of Payment	Amount Payable to the Vendor
On the date of the Business Registration	RMB10 million
(as defined below)	(equivalent to approximately HK$10.9 million)
Within three business days	RMB1.55 million
after the Delivery (as defined below)	(equivalent to approximately HK$1.69 million)
	(the "Final Payment")
Total	RMB11.55 million
	(equivalent to approximately HK$ 12.59 million)

The Consideration will be satisfied in cash and from the Company's internal resources.

The Consideration was determined between the Vendor and the Purchaser after arm's length negotiations with reference to, among others, the audited financial statements of the Target for the year ended 31 December 2018 and the appraised value of the entire equity interest of the Target as of 30 June 2019 based on the valuation report prepared by an independent valuer in the PRC with assets appraisal qualifications.

Business Registration

The Vendor and the Purchaser will make all registration and/or filing matters required by the SAIC (the "Business Registration") in connection with the transfer of equity interest under the Sale and Purchase Agreement on or before 30 September 2019.

Delivery

The Vendor shall deliver to the Purchaser all the relevant documents and information of the Target, as well as the Target's premises (the "Delivery") within 7 business days after completion of the Business Registration.

- 3 -

Completion

Completion shall take place on Completion Date.

Rights and liabilities

The Vendor will enjoy the profit and bear the liabilities (including the liabilities arising from claims, defaults or debt-recovery proceedings which have occurred or may occur in future) prior to the date of the Business Registration; and the Vendor will be responsible for any wages and salaries of the Target's employees incurred, accounts payable and accounts receivable of the Target prior to the Final Payment.

Termination

Prior to the Completion, either party may deliver a prior written notice to the other party to terminate the Sale and Purchase Agreement in the following situations:

1. where both parties consent to the termination in writing;
2. where restrictions prohibiting the Acquisition imposed by any governmental authority having jurisdiction have become final and non-appealable; or
3. where a party has made material misrepresentation or has materially breached its representations, warranties or undertakings contained in the Sale and Purchase Agreement, and such material breach has caused the purpose of the Sale and Purchase Agreement no longer attainable or has caused material adverse effect to the non-breaching party, and has not been rectified within 30 business days after the non-breaching party notifies the breaching party of its intention to terminate the Sale and Purchase Agreement in writing, the non-breaching party may elect to terminate the Sale and Purchase Agreement by written notice.

In the event that the Sale and Purchase Agreement is terminated pursuant to paragraphs (1) and (2) above, neither party is liable to the other party in respect of the termination, and they shall assist each other to restore the position before the entry into of the Sale and Purchase Agreement.

INFORMATION ON THE GROUP, THE PURCHASER AND THE VENDOR

The Group is principally engaged in the sales and services of motor vehicles. Its business mainly includes new car sales, after-sales maintenance, auto beauty, retrofitting, used car sales, auto insurance, auto parts and related-product sales business.

- 4 -

The Purchaser is a company incorporated under the laws of the PRC with limited liability and is principally engaged in the operation and management of 4S dealership stores of auto brand of BMW.

The Vendor, is a company incorporated under the laws of the PRC with limited liability and is principally engaged in auto sales and services business.

INFORMATION ON THE TARGET

The Target is a company incorporated under the laws of the PRC with limited liability and is principally engaged in the management and operation of 4S dealership stores of auto brand of Volkswagen.

Net Profit Before/After Tax

The table below sets forth the financial information of the Target for the years ended 31 December 2017 and 2018.

	For the year ended	For the year ended
	31 December 2017	31 December 2018
	(RMB in thousands)	(RMB in thousands)
	(Audited)	(Audited)
Net profit/ (loss) before tax	1,733.51	(3,426.19)
Net profit/ (loss) after tax	1,733.51	(3,426.19)
Net asset value	17,515.65	14,089.47

- 5 -