Hunan Jiangnan Red Arrow Co., Ltd. (SZSE:000519) agreed to acquire Nanyang Beifang Xiangdong Industrial Co., Ltd. from Yuxi Industrial Group Co., Ltd. for approximately CNY 270 million in cash and stock on December 12, 2015. Hunan Jiangnan Red Arrow will issue shares to pay 85% of the transaction price at CNY 12.10 per share and 15% of the transaction price shall be paid in cash. 19.1 million shares will be issued. In related transactions, Hunan Jiangnan Red Arrow Co., Ltd. agreed to acquire Henan Beifang Hongyang Industrial Machinery Co., Ltd., Nanyang Beifang Hongyu Electromechanical Manufacturing Co., Ltd. and Zhengzhou Hongyu Special Automobile Co., Ltd. from Yuxi Industrial Group Co., Ltd.; agreed to acquire Shandong Beifang Binhai Machinery Co., Ltd. from Shandong Special Industry Group Co., Ltd.; and agreed to acquire Jilin Jiangji Special Industry Co., Ltd. from Jilin Jiangbei Machinery Manufacture Co., Ltd. on December 12, 2015.

Hunan Jiangnan Red Arrow will also raise gross proceeds of maximum CNY 2.05 billion to fund the cash consideration by issuing shares to not more than 10 specific investors. Nanyang Beifang Xiangdong Industrial reported total assets of CNY 220.92 million, shareholders' equity of CNY 101.34 million, operating revenues of CNY 171.55 million, operating profit of CNY 8.46 million and net profit of CNY 6.88 million as of December 31, 2014. The transaction is subject to approval by the State-owned Assets Supervision and Administration Commission of the State Council and China Securities Regulatory Commission and approval by the shareholders of Hunan Jiangnan Red Arrow. The transaction has been approved by China North Industries Group Corporation's internal decision-making bodies and State Administration of Science Technology and Industry for National Defense and received in principle approval of the State-owned Assets Supervision and Administration Commission of the State Council. The transaction has been approved by the Board of Directors of Hunan Jiangnan Red Arrow. In an amendment on January 19, 2017 The number of shares issued in in raising of supporting funds is 168.8 million for CNY 12.13 per share. The adjustments in the issue price, supporting funds amount, use of proceeds were approved by the Board of North Industries Group Red Arrow Co., Ltd. As of January 19, 2017 the transaction was approved by China Securities Regulatory Commission, approved by Ministry of Commerce of the People's Republic of China Anti-Monopoly Bureau, approved by internal decision-making bodies Yuxi Industrial Group Co., Ltd., Shandong Special Industry Group Co., Ltd., Jilin Jiangbei Machinery Manufacturing Co., Ltd. Citic Securities Co., Ltd. acted as independent financial advisor, King & Wood Mallesons acted as legal advisor and Moore Stephens Da Hua Certified Public Accountants acted as accountant for Hunan Jiangnan Red Arrow Co., Ltd.