Guangdong Tianan New Material Co., Ltd. (SHSE:603725) entered into a framework agreement to acquire Zhejiang Rexin Decorative Material Co., Ltd. from 11 individuals (sellers) on December 30, 2020. The consideration will be paid in cash. Within three working days after the signing of the agreement, Guangdong Tianan New Material Co., Ltd. and the sellers shall pay each other a transaction deposit of CNY 5 million. The deposit paid by Guangdong Tianan New Material Co., Ltd. will be automatically converted to the purchase price. The final acquisition transaction amount and other content are subject to the formal agreement to be signed separately. Under the transaction, Cao Chunqing, Guo Ying, Xu Weidong, Zhang Jing, Xu Guoping, Lu Xinming, Fang Huiming, Wang Min, Zhang Ying, Zhang Xiansheng and Ren Huashan will sell 30.07%, 15.3%, 12.63%, 10.67%, 8.9%, 7.12%, 5.34%, 4.63%, 1.78%, 1.78% and 1.78% respectively, in Zhejiang Rexin Decorative Material Co., Ltd. The first acquisition will be 60% stake for CNY 117.3 million, and the overall valuation will be determined based on the price-earnings ratio of 8.5 times the 2020 net profit. The second acquisition will be 30% stake, and the overall valuation will be determined based on the price-earnings ratio of 8.5 times the 2021 net profit. If sellers submit this acquisition request to Guangdong Tianan New Material Co., Ltd. before January 31, 2022, the acquisition should be completed before May 31, 2022. The third acquisition will be 10% stake, and the overall valuation will be determined based on the price-earnings ratio of 10 times the 2020 net profit. If the cumulative realized net profit of Zhejiang Rexin Decorative Material Co., Ltd. in 2021, 2022, and 2023 is lower than the commitment period of the sellers, 90% of the accumulated net profit, at the same time as the acquisition, the sellers must complete the performance compensation as agreed in this agreement. If the sellers submit the acquisition request to Guangdong Tianan New Material Co., Ltd. before January 31, 2024, the acquisition shall be completed before May 31, 2024.

If the actual net profit accumulated by Zhejiang Rexin Decorative Material Co., Ltd. during the commitment period does not reach 90% of the accumulated committed net profit agreed in this agreement, the sellers intend to be the subject of the performance commitment to calculate compensation which will be payable in cash. The agreement also includes performance reward, if Zhejiang Rexin Decorative Material Co., Ltd.'s cumulative actual realized net profit during the performance commitment period is greater than the cumulative committed net profit. The total amount of accrued performance rewards shall not exceed 50% of the difference between the cumulative realized net profit during the performance commitment period minus the cumulative committed net profit, and the total reward shall not exceed 20% of the transaction price.

If Guangdong Tianan New Material Co., Ltd. terminates the transaction, the parties shall return the deposit to each other. Guangdong Tianan New Material Co., Ltd. (SHSE:603725) signed an agreement to acquire Zhejiang Rexin Decorative Material Co., Ltd. from 11 individuals (sellers) on March 15, 2021. After the completion of this transaction, Zhejiang Rexin Decorative Material Co., Ltd. will become Guangdong Tianan New Material Co., Ltd.'s controlled subsidiary. Zhejiang Rexin Decorative Material Co., Ltd. reported revenue of CNY 23.5 million, total assets of CNY 106.7 million, net income of CNY 23.5 million and net assets of CNY 42.2 million for the year ending, December 31, 2020. The Board of Directors of Zhejiang Rexin Decorative Material Co., Ltd. shall have 3 directors, of which Guangdong Tianan New Material Co., Ltd. will nominate 2 directors and the sellers will nominate 1 director. Zhejiang Rexin Decorative Material Co., Ltd. will nominate the chairman of the board. If the shareholder meeting of Zhejiang Rexin Decorative Material Co., Ltd. approves the transaction, the sellers will issue a written document waiving the right of first refusal to Guangdong Tianan New Material Co., Ltd. Guangdong Tianan New Material Co., Ltd. will submit the transaction to the Board of Directors and the general meeting of shareholders for approval. If Guangdong Tianan New Material Co., Ltd.'s general meeting of shareholders approves the transaction, all parties shall implement the equity purchase agreement. The transaction has been unanimously approved by tenth meeting of the third Board of Supervisors of Guangdong Tianan New Material Co., Ltd. on March 16, 2021. As of march 31, 2021, the transaction is approved by the shareholders of Guangdong Tianan New Material. As of April 9, 2021, Guangdong Tianan New Material Co., Ltd. completed the acquisition of 60% stake in Zhejiang Rexin Decorative Material Co., Ltd. from 11 individuals (sellers). As of January 17, 2022, Zhejiang Rexin Decorative Material received the second acquisition request from Guangdong Tianan New Material, requesting the company to acquire its 30% stake in Rexin Packing Materials. According to the relevant stipulations of the acquisition agreement, the company intends to acquire 30% equity of Rexin Packing Materials held by the counterparty in cash, and the second acquisition and transaction consideration will be paid before May 31, 2022. Finish. After the completion of this acquisition, the company's shareholding in Rexin Packing Materials will increase from 60% to 90%, which will not lead to changes in the scope of the company's consolidated statements. As of May 16, 2022, in the Annual General Meeting of Shareholders, Shareholders of Guangdong Tianan New Material Co., Ltd. approved the partial transaction of equity. As announced on August 9, 2022, Guangdong Tianan New Material Co., Ltd. recently completed the acquisition of additional 30% stake in Zhejiang Rexin Decorative Material Co., Ltd. from 11 individuals (sellers). As a result, Guangdong Tianan New Material's holdings increased from 60% to 90%.