Yestar Healthcare : VOLUNTARY ANNOUNCEMENT - ACQUISITION OF 70% EQUITY INTEREST IN BEIJING KAIHONGDA TECHNOLOGY... 2017-09-20

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Yestar Healthcare Holdings Company Limited

巨 星 醫 療 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2393)

VOLUNTARY ANNOUNCEMENT

ACQUISITION OF 70% EQUITY INTEREST IN

BEIJING KAIHONGDA TECHNOLOGY COMPANY LIMITED*

DISCLOSEABLE TRANSACTION

On 20 September 2017 (after trading hours of the Stock Exchange), the Purchaser, the Vendors and the Target Company entered into the Share Transfer Agreement, pursuant to which the Purchaser conditionally agreed to acquire, and the Vendors conditionally agreed to sell, the Sale Capitals (representing 70% of the entire equity interest) in the Target Company at a consideration of RMB105,000,000. The Consideration is to be satisfied by cash by way of internal cash resources and/or available banking facilities.

Upon Completion, the Target Company, which is principally engaged in the sales and distribution of medical equipment in vitro diagnostic industry and distribution of Roche Diagnostics Products in Beijing Municipality and Inner Mongolia Autonomous Region in the PRC under the authorization letters with Roche, will become an indirect non-wholly- owned subsidiary of the Company and the financial results thereof will be consolidated into the consolidated financial statements of the Group. Completion is subject to the fulfillment or waiver (as the case may be) of certain conditions precedent as set out in the paragraph headed ''Conditions Precedent'' below.

As all the applicable aggregate percentage ratios (as defined under the Listing Rules) in respect of the Acquisition are below 5%, the Acquisition does not constitute any discloseable transaction of the Company under Chapter 14 of the Listing Rules. This announcement is made by the Company on a voluntary basis.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the date of this announcement, each of the Vendors and their respective associates is an Independent Third Party. Accordingly, no Director has a material interest and is required to abstain from voting on the board resolution approving the transactions contemplated under the Share Transfer Agreement.

As the Acquisition is subject to the conditions precedent set out in the Share Transfer Agreement being satisfied or waived (as the case may be), and the Acquisition may or may not proceed to Completion, Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

On 20 September 2017 (after trading hours of the Stock Exchange), the Purchaser, the Vendors and the Target Company entered into the Share Transfer Agreement, pursuant to which the Purchaser conditionally agreed to acquire, and the Vendors conditionally agreed to sell, the Sale Capitals (representing 70% of the entire equity interests) in the Target Company at a consideration of RMB105,000,000. The Consideration is to be satisfied by cash by way of internal cash resources and/or available banking facilities.

THE SHARE TRANSFER AGREEMENT

Date:

On 20 September 2017

Parties to the Acquisition Agreement:

1. Mr. Pang Hai Bin, Mr. Xie Ding Jie, Ms. An Hong (collectively the ''Management Team''), Mr. Yu Huimin, Mr. Zhu Yongping and Mr. Zhao Xiangsheng, together with the Management Team, as the Vendors;

2. The Purchaser, a wholly-owned subsidiary of the Company, as the Purchaser; and

3. The Target Company, which is owned by Mr. Pang Hai Bin, Mr. Xie Ding Jie, Ms. An Hong, Mr. Yu Huimin, Mr. Zhu Yongping and Mr. Zhao Xiangsheng, as to 41.5%, 10.0%, 7.0%, 9.0%, 22.0% and 10.5% respectively before the Completion of the Acquisition.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the date of this announcement, each of the Vendors and their respective associates is an Independent Third Party. Accordingly, no Director has a material interest and is required to abstain from voting on the board resolution approving the Share Transfer Agreement and the transactions contemplated thereunder.

Interests to be acquired of under the Acquisition

Pursuant to the Share Transfer Agreement, the Purchaser conditionally agreed to acquire and the Vendors conditionally agreed to sell the Sale Capitals, representing 70% of the entire equity interests of the Target Company. Upon Completion, the Target Company will become an indirectly non-wholly owned subsidiary of the Company.

Shareholding of the Target Company before and immediately upon Completion

The shareholding structure of the Target Company before and after the Completion is set out below:

Mr. Pang Hai Bin	Mr. Xie Ding Jie	Ms. An Hong	Mr. Yu Huimin	Mr. Zhu Yongping	Mr. Zhao Xiangsheng	Yestar Medical
Before Completion	41.5%	10.0%	7.0%	9.0%	22.0%	10.5%	0%
After Completion	20.0%	5.0%	0%	0%	5.0%	0%	70.0%
Consideration

The Consideration for the Acquisition is RMB105,000,000, including all relevant taxes to be withheld or paid to the PRC authorities, shall be paid by the Purchaser to the Vendors in three installments upon satisfaction of certain conditions by the Vendors. The Vendors shall file and pay their respective tax to the competent tax authorities in accordance with the relevant laws and regulations, and deliver a copy of their tax receipts to the Purchaser after tax payment as the basis for the Purchaser to pay the after-tax Consideration upon receipt of each tax receipt.

The payment to each of the Vendors for the respective shareholding will be as follows:

Mr. Pang Hai Bin

Mr. Xie

Ding Jie Ms. An Hong

Mr. Yu Huimin

Mr. Zhu Yongping

Mr. Zhao

Xiangsheng Total

(RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB)

First payment 9,675,000 2,250,000 3,150,000 4,050,000 7,650,000 4,725,000 31,500,000

Second payment 16,125,000 3,750,000 5,250,000 6,750,000 12,750,000 7,875,000 52,500,000 Third payment 6 ,450,000 1,500,000 2, 100,000 2,700,000 5,100,000 3,150,000 21,000,000

Total 32,250,000 7,500,000 10,500,000 13,500,000 25,500,000 1 5 ,750,000 105,000,000

Conditions Precedent

Completion is subject to the conditions precedent being fulfilled or waived (as the case may be). Certain of the conditions precedent are waivable, at any time before Completion by the Purchaser by notice in writing to the Vendors.

Fulfilment of each of the conditions precedent shall be subject to the Purchaser's review and approval or shall be waived (as the case may be) by the Purchaser by way of written confirmation. The Effective Date shall be the date on which a written confirmation has been issued by the Purchaser confirming that all conditions precedent have been fulfilled or otherwise waived. If the conditions precedent are not fulfilled or waived in writing by the Purchaser in full within 180 days after the execution of the Share Transfer Agreement or on such later date as mutually agreed by parties in writing (the ''Long Stop Date''), the Purchaser shall have the right to terminate the Share Transfer Agreement.

Completion

Subject to the fulfillment or waiver of all the aforementioned conditions precedent, the Completion Date shall be the date of fulfilment on which the following have been duly completed:

1. the change of business registration particulars of the Target Company for the transfer of the Sale Capitals; and

2. the amendment of the register of shareholders of the Target Company.

Distributable profits

The Management Team undertakes that after the Completion, the Purchaser shall be entitled to the accumulated undistributed profit of the Target Company as at 31 December 2016, provided that the Target Company has sufficient cash flow which ensures the normal and smooth operation of the Target Company in the next three years. Subject to the Completion, the profit of the Target Company arising after 31 December 2016 shall be shared among the Purchaser and the Vendors according to their respective shareholdings in the Target Company after the Completion.

Profit guarantee

It is unanimously agreed that the three full years from 2017 to 2019 are fixed as the period covered by the profit guarantee.

Pursuant to the Share Transfer Agreement, the Vendors irrevocably and unconditionally guarantees that each of the 2017 Net Profit, 2018 Net Profit and 2019 Net Profit which are confirmed by independent auditors accredited by the parties shall not be less than RMB15,000,000, RMB18,000,000 and RMB21,600,000 (each the ''Annual Guarantee Profit'') respectively.

In the event that any of the 2017 Net Profit, 2018 Net Profit and 2019 Net Profit is less than the Annual Guarantee Profit, the Vendors shall severally and jointly pay compensation to the Purchaser calculated by the following formula:

(Annual Guarantee Profit - Actual Net Profit) x 2

If the Target Company records a net loss in any of the financial years from 2017 to 2019, the Vendors shall severally and jointly pay compensation to the Purchaser calculated by the following formula:

(Annual Guarantee Profit + Actual Net Loss) x 2

The accumulated maximum compensation shall be the Consideration received by the Vendors under the Acquisition. If the total accumulated net profit after tax of the Target Company during the three years covered by the profit guarantee amounts to or exceeds the aggregate Annual Guarantee Profit for the period covered by the profit guarantee (which means that the total accumulated net profit after tax from the year 2017 to the year 2019 is not less than RMB54,600,000), the Purchaser will return any compensation paid for any shortfall in any year to the Vendors within 30 days after the issue of the audited report for the year 2019.