Shanghai Fosun Pharmaceutical : VOLUNTARY ANNOUNCEMENT – ENTERING INTO THE INVESTMENT AGREEMENT (H SHARES)

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上 海 復 星 醫 藥（集 團）股 份 有 限 公 司

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02196)

VOLUNTARY ANNOUNCEMENT

ENTERING INTO THE INVESTMENT AGREEMENT

THE ACQUISITION AND CAPITAL INCREASE

The Board announces that, on 20 August 2021, the Acquirer, a subsidiary of the Company, entered into the Investment Agreement with Mr. Wu Chun, Suzhou Abcepta, Wukong AI, the Selling Shareholders and the Target Company in relation to, among others, (i) the Selling Shareholders agreed to sell and the Acquirer agreed to purchase the Sale Interest for an aggregate consideration of RMB101.8808 million; and (ii) the Acquirer agreed to make cash contribution in the amount of RMB80 million to subscribe for an additional registered capital of RMB3,304,273.13 in the Target Company. Upon completion of the Acquisition and the Capital Increase, the Acquirer will hold approximately a 58.6702% equity interest in the Target Company.

GRANT OF PUT OPTIONS

Under the Investment Agreement, the Acquirer (i) agreed to grant the Baifan Put Option to Suzhou Baifan, pursuant to which Suzhou Baifan shall have the right at any time during the Put Option Period to require the Acquirer to purchase all the equity interest in the Target Company held by Suzhou Baifan, representing in any event not more than a 7.2186% equity interest in the Target Company on 31 December 2025; and

1. subject to the terms and conditions under the Investment Agreement, agreed to grant the Baichun Put Option to Suzhou Baichun, pursuant to which Suzhou Baichun shall have the right at any time during the Put Option Period to require the Acquirer to purchase 80% of the then equity interest in the Target Company held by Suzhou Baichun, representing in any event not more than a 27.2890% equity interest in the Target Company on 31 December 2025.

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Given that the exercise of each of the Put Options is not at the discretion of the Acquirer, the grant of Put Options shall be deemed as if each of the Put Options had been exercised pursuant to the Hong Kong Listing Rules. Therefore, the Acquisition, the Capital Increase and the grant of Put Options shall be aggregated pursuant to the Hong Kong Listing Rules, and as all the applicable percentage ratios in relation to the transactions contemplated under the Investment Agreement on an aggregate basis are less than 5%, the transactions contemplated under the Investment Agreement do not constitute notifiable transactions under Chapter 14 of the Hong Kong Listing Rules. This announcement is made by the Company on a voluntary basis.

1. THE INVESTMENT AGREEMENT
   The Board announces that, on 20 August 2021, the Acquirer, a subsidiary of the Company, entered into the Investment Agreement with Mr. Wu Chun, Suzhou Abcepta, Wukong AI, the Selling Shareholders and the Target Company in relation to, among others, (i) the Selling Shareholders agreed to sell and the Acquirer agreed to purchase the Sale Interest for an aggregate consideration of RMB101.8808 million; and (ii) the Acquirer agreed to make cash contribution in the amount of RMB80 million to subscribe for an additional registered capital of RMB3,304,273.13 in the Target Company. Upon completion of the Acquisition and the Capital Increase, the Acquirer will hold approximately a 58.6712% equity interest in the Target Company.
   The principal terms of the Investment Agreement are summarised below.
   Date
   20 August 2021
   Parties
   (1). the Acquirer;
   (2). Mr. Wu Chun;
   (3). Suzhou Abcepta;
   (4). Wukong AI;
   (5). the Selling Shareholders; and
   (6). the Target Company.
   To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, each of Mr. Wu Chun, Suzhou Abcepta, Wukong AI, the Selling Shareholders and the Target Company, and their respective ultimate beneficial owners are third parties independent of the Company.

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Asset to be acquired

Under the Investment Agreement, subject to the completion of the US Share and Asset Transfer (as defined below), the Selling Shareholders agreed to sell and the Acquirer agreed to purchase the Sale Interest for a cash consideration in an aggregate amount of RMB101.8808 million, representing approximately 44.2944% of the total equity interest in the Target Company as at the date of this announcement.

Pursuant to the terms of the Investment Agreement, (i) Abcarta agreed to purchase all the outstanding issued shares in Abcepta held by other existing shareholders, representing 49% of the total share capital of Abcepta, and upon the completion of which, Abcepta will be become a wholly-owned subsidiary of Abcarta; and (ii) Abcepta agreed to purchase and Innopep, Inc. agreed to assign all the assets under an asset purchase agreement between Innopep, Inc. and Abgent, Inc. (the "US Share and Asset Transfer").

Capital Increase

Under the Investment Agreement, the Acquirer agreed to make cash contribution in the amount of RMB80 million to subscribe for addition registered capital of RMB3,304,273.13 in the Target Company. The surplus in the amount of RMB76,695,726.87 will be recorded to the capital reserve of the Target Company. Upon completion of the Acquisition and Capital Increase, the financial results of the Target Company will be consolidated into the financial statements of the Group.

The following table sets forth the shareholders of, and their shareholding in, the Target Company as at the date of this announcement and upon completion of the Acquisition and the Capital Increase:

							Upon completion of the Acquisition
	As at the date of this announcement		and Capital Increase
	Registered capital			Registered capital
		subscribed	Approx. % of		subscribed	Approx. % of
Shareholders		(RMB)	shareholding		(RMB)	shareholding
BOHE	1,372,222	14.4449%		-	-
Jiarui Wanshan	351,744	3.7027%		-	-
Miracle Light	457,407	4.8150%		-	-
Tahoe Growth II	703,488	7.4054%		-	-
Suzhou Baichun	5,549,480	57.4702%	4,367,584	34.1112%
Suzhou Baifan	1,155,335	12.1618%	924,268	7.2186%
The Acquirer		-	-	7,512,097.13	58.6702%
Total	9,499,676		100%		12,803,949.13		100%

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Consideration

The consideration for the Sale Interest and the amount of capital contribution to be made by the Acquirer was determined after arm's-length negotiation between the parties to the Investment Agreement based on the pre-money valuation of the Target Company in the amount of RMB230 million, which were negotiated and determined between the parties to the Investment Agreement with reference to the valuation of the Target Company for the previous round financing taking into account of the Target Company's operation results, the development and breakthrough of the product pipeline and technology platform, market share of its products and its planning regarding the pathologic diagnosis industry and R&D.

The consideration for the Sale Interest and the capital contribution to be made by the Acquirer under the Investment Agreement will be financed by the self-raised funds of the Acquirer.

Payment schedule

The total consideration to be paid by the Acquirer, comprising the consideration for the Sale Interest and cash capital contribution, in the total amount of RMB181.8808 million shall be settled in two instalments,

1. the first instalment of which shall be in an aggregate amount of RMB131.8808 million (comprising the total consideration for the Sale Interest and RMB30 million as a part of the capital contribution), which shall be paid within 5 working days upon confirmation of the Acquirer that the conditions for the first instalment having been satisfied; and (ii) the second instalment of which shall be in the amount of RMB50 million (being the remaining part of the capital contribution), which shall be paid within 5 working days upon confirmation of the Acquirer that the conditions for the second instalment having been satisfied. For the avoidance of doubt, the shareholding percentage of the Acquirer in the Target Company on the Closing Date shall not be affected by the payment of the second instalment of the total consideration.

Conditions precedent

Under the Investment Agreement, the obligation of the Acquirer to pay the first instalment of the total consideration thereunder shall be subject to the satisfaction (or waiver) of, among others, the following major conditions:

(1). the relevant transaction documents including, among others, the shareholders' agreement, the articles of association of the Target Company and any ancillary documents in relation thereto, having been duly executed;

(2). all necessary consents and approvals in relation to the Acquisition and the Capital Increase having been obtained by the Target Group and the Selling Shareholders respectively;

(3). the US Share and Asset Transfer having been duly completed;

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(4). the appointment of the directors nominated by the Acquirer having been approved by the shareholders of the Target Company at its general meeting;

(5). the adoption of an employee equity incentive plan that is satisfactory to the Acquirer having been duly approved by the Target Company;

(6). the respective registered capital of the Target Company subscribed by each of BOHE and Miracle Light having been fully paid up; and

(7). up to the Closing Date, there having been no material adverse change to the legal status, operation and financial position of the Target Company.

Under the Investment Agreement, the obligation of the Acquirer to pay the second instalment of the total consideration thereunder shall be subject to the satisfaction (or waiver) of the following conditions:

(1). the respective registered capital of the Target Company that subscribed for by Suzhou Baichun and Suzhou Baifan having been fully paid up;

(2). the necessary filing with the relevant competent authorities in respect of the transactions contemplated under the Investment Agreement having been duly completed; and

(3). the conditions for the first instalment of the total consideration shall remain satisfied as at the payment date in respect of the second instalment of the total consideration.

Grant of Put Options

Grant of Baifan Put Option

Under the Investment Agreement, the Acquirer agreed to grant the Baifan Put Option to Suzhou Baifan, pursuant to which Suzhou Baifan shall have the right at any time during the Put Option Period to require the Acquirer to purchase all the equity interest in the Target Company held by Suzhou Baifan, representing in any event not more than a 7.2186% equity interest in the Target Company on 31 December 2025. Upon exercise of the Baifan Put Option, Suzhou Baifan and the Acquirer shall enter into a separate equity transfer agreement, and the consideration for such transfer shall be determined based on the Target Company's valuation with reference to, whichever is lower, (i) price-to-earnings ratio of 18 times over the net profit of the Target Company as set out in the audited financial statements for the year ended 31 December 2025; and (ii) RMB1 billion, provided that, such lower valuation shall not be less than the post- money valuation of RMB310 million as contemplated under the Investment Agreement.

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