Jiangsu Changling Hydraulic Co., Ltd (SHSE:605389) signed intention framework agreement to acquire 70% stake in Jiangyin Shangchi Machinery Equipment Co., Ltd. from Jiangyin Shangtuo Enterprise Management Partnership (Limited Partnership) and Xu Jianhu for approximately CNY 340 million on January 20, 2023. As reported, the consideration will be paid through cash and issuing shares. Xu Jianhu will receive a cash consideration of CNY 65.3 million and Jiangyin Shangtuo Enterprise Management Partnership (Limited Partnership) will receive a cash consideration of CNY 65.1 million. In addition, Jiangsu Changling Hydraulic Co., will issue 7,717,567 shares as consideration. Under the transaction, Xu Jianhu will transfer 45.33% stake and Jiangyin Shangtuo Enterprise Management Partnership (Limited Partnership) will transfer 24.67% stake in Jiangyin Shangchi Machinery Equipment Co., Ltd. Following the acquisition, Jiangyin Shangchi Machinery Equipment Co. will become a holding subsidiary of Jiangsu Changling Hydraulic Co. Jiangsu Changling Hydraulic will raise supporting funds by issuing shares to no more than 35 qualified investors. The total amount of supporting funds raised this time does not exceed CNY 205 million. For the year ended December 31, 2022, Jiangyin Shangchi Machinery Equipment Co. reported total assets of in CNY 169.7 million and revenue was of CNY 157.1 million. The transaction is subject to approval by the general meeting of shareholders of Jiangsu Changling Hydraulic Co., approval by the Shanghai Stock Exchange and registration by the China Securities Regulatory Commission, and other necessary prior approval, approval or consent required by laws, regulations and regulatory authorities. As of March 8, 2023, the transaction has been approved by the board of directors and the board of supervisors of Jiangsu Changling Hydraulic Co. This transaction has been reviewed and approved by the shareholder meeting of Jiangyin Shangchi Machinery Equipment Co and the partner meeting held by Jiangyin Shangtuo Enterprise Management Partnership (Limited Partnership). On May 30, 2023, the transaction has been reviewed and approved at the 16th meeting of the second session of the board of directors and at the 14th meeting of the second board of supervisors of Jiangsu Changling Hydraulic Co. As of June 20, 2023, the shareholders of Jiangsu Changling Hydraulic Co., Ltd have approved the transaction. July 27, 2023, Transaction has been approved by Shanghai Stock Exchange M&A and Reorganization Review Committee.

Jiang Yu of Huatai United Securities Co., Ltd. acted as independent financial advisor; Zhao Xiaolei, Jiang Cheng, and Zhu Hao of C&T Partners acted as legal advisors; He Linfei and Xiao Lan of Pan-China Certified Public Accountants (Special General Partnership) acted as auditors and Xu Hao and He Jingjing of China United Assets Appraisal Group (Zhejiang) Co., Ltd. acted as valuation agency to Jiangsu Changling Hydraulic Co.