Luye Pharma Group Limited — M&A Activity 2017

May 23, 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

VOLUNTARY ANNOUNCEMENT MEMORANDUM OF UNDERSTANDING IN RELATION TO THE PROPOSED ACQUISITION

THE MOU

The Board is pleased to announce on 22 May 2017, the Company entered into the non-legally binding MOU with the Target Company and the Agent in relation to the Proposed Acquisition.

The Board wishes to emphasize that the MOU may or may not lead to any Formal Agreement. If the Proposed Acquisition is materialised, it may constitute a major transaction on the part of the Company. The Company will comply with the relevant requirements of the Listing Rules when any Formal Agreement in relation to the Proposed Acquisition is entered into or there are any material developments with respect to the Proposed Acquisition. As such, shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

• For identification purposes only

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THE MOU

The Board is pleased to announce that on 22 May 2017, the Company entered into the MOU with the Target Company and the Agent in relation to the Proposed Acquisition.

To the best knowledge, information and belief of the directors of the Company, after having made all reasonable enquiries, the Target Company, the Agent and the Potential Vendors are third parties independent of and not connected with the Company and its connected persons (as defined under the Listing Rules).

Major terms of the MOU

1. Subject Matter

The MOU contemplates the proposed acquisitions of 32% shares of the Target Company by the Company from the Potential Vendors.

2. Consideration

The MOU contemplates that the consideration for the Proposed Acquisition shall be further negotiated and determined by the parties to the MOU subject to the results of the legal and financial due diligence on the Target Group and any profit guarantee that may be given under the Formal Agreement.

The consideration will be settled by several installments over a four-year period. The first installment will be settled after the Formal Agreement becomes effective following fulfilment of the conditions precedent of the Formal Agreement. The remaining consideration will be settled after the audited consolidated financial statements of the Target Company for each of the financial years from 2017 to 2020 have been issued and approved by the Company.

3. Due diligence review

The Target Company shall, and the Agent shall use his best endeavours to procure the Target Company and its agent to, provide such assistance and information as is necessary for the Company to complete its due diligence review on the Target Group.

4. Conditions Precedent

The completion of the Proposed Acquisition is conditional upon fulfilling, including but not limited to, the conditions precedent such as obtaining all necessary prior approvals (if any) as required and the Company is satisfied with the due diligence results on the Target Group.

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5. Binding Effect

Save for provisions relating to, principally, confidentiality, notices, exclusivity, binding effect, due diligence review, termination, governing law and jurisdiction and fees and expenses, the MOU does not constitute a legally-binding commitment on parties to the MOU in respect of the Proposed Acquisition.

6. Exclusivity

During a 60-day period after the date of execution of the MOU (the “ Exclusivity Period ”), the Agent shall not directly or indirectly negotiate or agree with any other party with respect to the disposal of the Target Group or any of its businesses.

7. Formal Agreement

The parties to the MOU shall use their best endeavours to procure the signing of the Formal Agreement within the Exclusivity Period. The Company has the right to nominate one of its subsidiaries as the purchaser to enter into the Formal Agreement.

8. Termination

The MOU will be terminated at the earlier of:

• (i) the expiry of the Exclusivity Period; or

• (ii) the date of execution of the Formal Agreement.

INFORMATION OF THE TARGET GROUP

The Target Company is a company incorporated in the Cayman Islands with limited liability and is principally engaged in investment holding. The Target Group is primarily engaged in the brokerage of insurance and provision of other investment products in Hong Kong. It collaborated with leading financial institutions to provide a wide range of investment products for its customers which include investment-linked assurance schemes, premium financing plans, life & health insurance and real estate investment plans. The Target Company also offers asset management services to its high net worth customers and those who have purchased investment-linked assurance schemes to manage their investment.

The Target Company has several wholly owned subsidiaries, one of which is a company incorporated in Hong Kong with limited liability and is principally engaged in provision of asset management, wealth management and general financial services for both individuals and institutions in Hong Kong. It is licenced under the SFO and permitted to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities (as defined in the SFO).

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REASONS FOR THE PROPOSED ACQUISITION

The Group is principally engaged in property investment and sourcing, subcontracting, marketing and selling of outwear garments and sportswear products (the “ Export Business ”).

In view of the weak business performance on the Group’s Export Business and the anticipated difficulties in obtaining sales orders with sustainable profitability, in order to improve the Company’s sustainable profitability and operation results, after careful assessment of the development prospect of the Export Business, the Group will actively explore new business opportunities with growth potential other than the Group’s existing principal businesses and focus on developing the business opportunities from the “One Belt, One Road” initiative to broaden the Group’s sources of income and to enhance its business development.

In view of the business scope and growth potential of the Target Company, the Directors consider that the Proposed Acquisition is in line with the business development direction of the Group taking advantages of the securities licenses, fund raising channels, client resources, sales channels and talent pool of the Target Group through establishing and managing investment fund and other methods to promote the Group’s business expansion in property investment, diversify and upgrade its profit model of property investment. Meanwhile, the Proposed Acquisition is a good investment opportunity for the Group to expand into the insurance and securities industry. In addition, it serves the Group to access fully to the investment opportunities brought along by the “One Belt, One Road” initiative, enhance the Group’s growth potential and create new business growing points for the Group.

Having considered the past operation and business performance of the Target Group and the licensed status of the Subsidiary to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO, the Directors are of the view that the Proposed Acquisition is in the interests of the Company and the Shareholders as a whole.

The Board wishes to emphasize that the MOU may or may not lead to any Formal Agreement. If the Proposed Acquisition is materialised, it may constitute a major transaction on the part of the Company. The Company will comply with the relevant requirements of the Listing Rules when any Formal Agreement in relation to the Proposed Acquisition is entered into or there are any material developments with respect to the Proposed Acquisition. As such, shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

“Agent” the agent of the Potential Vendors, holding 15% interest of the Target Company as at the date of the MOU

“Board” the board of directors of the Company

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“Company” Takson Holdings Limited (stock code: 918), a company incorporated in Bermuda with limited liability, the securities of which are listed on the main board the Stock Exchange

• “Formal Agreement” any formal sale and purchase agreement in relation to the Proposed Acquisition

• “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “MOU” the memorandum of understanding dated 22 May 2017 entered into relating to the Proposed Acquisition

• “Potential Vendors” the shareholders of the Target Company “Proposed Acquisition” the proposed acquisition of 32% shares of the Target Company by the Company from the Potential Vendors as contemplated under the MOU

• “SFO” Securities and Futures Ordinance “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Company” A company incorporated in the Cayman Islands with limited liability and is principally engaged in investment holding

• “Target Group” the Target Company and its subsidiaries

By order of the Board

Takson Holdings Limited Zhou Xinyu

Chief Executive Officer & Executive Director

Hong Kong, 23 May 2017

As at the date of this announcement, the executive Directors are Mr. Ren Qingxin, Mr. Zhou Xinyu and Ms. Niu Fang; the independent non-executive Directors are Ms. Ni Lijun, Mr. Shen Guoquan and Ms. Meng Rongfang.

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