Qingdao AInnovation Technology Group Co., Ltd. (SEHK:2121) agreed to acquire 51% of stake in Shanghai Higher Mechanical & Electrical Co., Ltd. from Chen Hong, Liao Lu and He Li for approximately CNY 150 million on May 20, 2022. The total consideration will be paid in four instalments in cash. 65.9% of the payment of the total consideration will be funded by the internal resources of Qingdao, and the remaining 34.1% of the payment of the consideration will be funded by the proceeds from initial public offering of H shares of Qingdao on the Stock Exchange. The first share transfer payment is 50% of the total consideration for the share transfer, i.e. CNY 76.5 million. Qingdao shall pay Vendors I within two business days after Shanghai Higher completed the relevant industrial and commercial changes/filing procedure. The second, third and fourth share transfer payments are 1/6 of the total consideration for the share transfer, respectively, i.e. CNY 25.5 million and will be paid in three years. Upon completion of the Acquisition Shanghai Higher will become a subsidiary of Qingdao and its results will be consolidated into the financial statements of the Group. The transaction is subject to due diligence, all government authorities and the consents of all relevant third parties.