XD : DISCLOSEABLE TRANSACTION - ACQUISITION OF 6.86% EQUITY INTEREST IN YIWAN

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XD Inc.

心动有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2400)

DISCLOSEABLE TRANSACTION

ACQUISITION OF 6.86% EQUITY INTEREST IN YIWAN

INTRODUCTION

The Board is pleased to announce that, on May 12, 2021, X.D. Network (a PRC Consolidated Affiliated Entity of the Company) entered into the Equity Transfer Agreement with the Vendor, pursuant to which, X.D. Network has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, 6.86% equity interest in Yiwan held by them for a consideration of RMB171,610,290.98. Upon the Completion, X.D. Network will hold 80.98% equity interest in Yiwan.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the Acquisition, when aggregated with the applicable percentage ratios for the Previous Acquisition according to Rule 14.22 of the Listing Rules, is more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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INTRODUCTION

The Board is pleased to announces that, on May 12, 2021, X.D. Network (a PRC Consolidated Affiliated Entity of the Company) entered into the Equity Transfer Agreement with Shanghai Xinhe, pursuant to which, X.D. Network has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, 6.86% equity interest in Yiwan held by it for a consideration of RMB171,610,290.98. Upon the Completion, X.D. Network will hold 80.98% equity interest in Yiwan.

THE EQUITY TRANSFER AGREEMENT

Date

May 12, 2021

Parties

1. X.D. Network (as the purchaser); and
2. Shanghai Xinhe (as the Vendor).

Subject Matter

X.D. Network entered into the Equity Transfer Agreement with the Vendor, pursuant to which, X.D. Network has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, 6.86% equity interest in Yiwan held by it for a consideration of RMB171,610,290.98.

As of the date of this announcement, Yiwan was held as to 74.12% by X.D. Network and was a non-wholly owned subsidiary of X.D. Network immediately before the Completion. Upon the Completion, X.D. Network will hold 80.98% equity interest in Yiwan.

Consideration

The total consideration payable by X.D. Network for the Acquisition is RMB171,610,290.98. The consideration for the Acquisition will be financed by proceeds raised from the issue of convertible bonds completed on April 12, 2021 and the placing of new Shares completed on April 13, 2021, and/or by other internal financial resources.

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Basis of consideration

The consideration was determined by the parties after arm's length negotiations and with reference to the valuation of the entire equity interest in Yiwan as at December 31, 2020 appraised by an independent qualified valuer engaged by the Company based on the market approach.

Payment terms

X.D. Network shall pay the Vendor 45% of the consideration under the Equity Transfer Agreement within ten Business Days after all the following conditions are satisfied: (i) the representations and warranties are true, accurate, complete and not misleading; (ii) the Vendor has executed and delivered to X.D. Network, among others, all documents required to complete the Acquisition or requested by X.D. Network; (iii) the Vendor has obtained all approvals, consents and waivers required to complete the Acquisitions; and (iv) the Vendor has executed and delivered to X.D. Network the completion certificates.

Upon completion of the registration with the relevant administration for industry and commerce required in connection with the Acquisition, X.D. Network shall pay the Vendor 55% of the consideration under the Equity Transfer Agreement ("Second Instalment").

Completion

Completion of the Acquisition shall take place when the Second Instalment was paid.

FINANCIAL INFORMATION AND VALUATION OF YIWAN

Set out below is the unaudited financial information of Yiwan prepared for the two years ended December 31, 2020 in accordance with the IFRS:

For the year ended/As at December 31, December 31,

2019 2020

(Unaudited) (Unaudited)

(RMB) (RMB)

Total assets	635,850,326	961,161,136
Net assets	579,674,408	665,739,784
Net profit/(loss) before tax	194,914,713	92,149,002
Net profit/(loss) after tax	194,674,463	86,065,377

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The online game business of the Company has a natural and powerful synergy with TapTap. On the one hand, the diversified game portfolios of the Company have attracted more and more users who are keen to discuss games and share game experiences on TapTap. On the other hand, TapTap's gaming community enables the Company to better understand and satisfy gamers' demand for high-quality games and also to effectively follow market trends. The Acquisition will enable the Company to further strengthen the synergy between the game business and the TapTap platform.

OPINION FROM THE BOARD

None of the Directors has a material interest in the Acquisition or has abstained from voting on such board resolution.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Acquisition are fair and reasonable, the Acquisition is on normal commercial terms and in the interests of the Company and Shareholders as a whole.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the Acquisition, when aggregated with the applicable percentage ratios for the Previous Acquisition according to Rule 14.22 of the Listing Rules, is more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

INFORMATION ABOUT THE PARTIES

The Group develops and operates quality games in China and overseas and operates TapTap, a leading game community and platform in China.

X.D. Network is a company established in China and the Group's consolidated affiliated entity under contractual arrangements. It is principally engaged in game publishing and development.

Yiwan operates TapTap, a leading game community and platform in China.

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Shanghai Xinhe is a limited partnership, the general partner of which is a limited partnership where a subsidiary of Ping An Insurance (Group) Company of China, Ltd. (stock code: 02318) acts as a general partner and an independent third party as of the date of this announcement. Shanghai Xinhe's principal businesses include commercial consultation, enterprise management consultation, financial consultation, tax consultation and marketing consultation.

DEFINITIONS

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Acquisition"	the transaction contemplated under the Equity Transfer
	Agreement pursuant to which, X.D. Network has
	conditionally agreed to purchase, and the Vendor has
	conditionally agreed to sell, 6.86% equity interest
	in Yiwan held by them for a total consideration of
	RMB171,610,290.98
"associate(s)"	has the meaning ascribed thereto under the Listing Rules
"Board"	the board of Directors
"Business Day"	means any day (excluding a Saturday) on which banks are
	generally open for business in China
"Company"	XD Inc. (心动有限公司), a company incorporated in the
	Cayman Islands with limited liability, the Shares of which
	are listed on the Main Board of the Stock Exchange (Stock
	Code: 2400)
"Completion"	the completion of the Acquisition
"connected person"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the director(s) of the Company
"Equity Transfer Agreement"	the equity transfer agreement to be entered into between
	X.D. Network and Shanghai Xinhe on May 12, 2021 in
	relation to X.D. Network's acquisition of 6.86% equity
	interest in Yiwan
"Group"	the Company and its subsidiaries

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