Pharmaron Beijing Co., Ltd — M&A Activity 2022

Mar 27, 2022

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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Pharmaron Beijing Co., Ltd.* 康龍化成（北京）新藥技術股份有限公司

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

(Stock Code: 3759)

CONNECTED TRANSACTION ACQUISITION OF 100% EQUITY INTEREST IN ANIKEEPER

THE ACQUISITION

The Board is pleased to announce that on March 25, 2022, the Board approved the entering into of the Acquisition Agreement. The Acquisition Agreement is expected to be entered into among the Company, Ms. Chen Jing (陳靜) (“ Ms. Chen ”), Mr. Chen Xuejun (陳學軍) (“ Mr. Chen ”) (collectively, the “ Vendors ”) and Anikeeper by the middle of June 2022, pursuant to which the Company shall conditionally agree to purchase, and the Vendors shall conditionally agree to sell, 100% equity interest in Anikeeper at an initial consideration of RMB83.60 million (subject to further adjustment as further detailed in this announcement) in accordance with the terms and conditions of the Acquisition Agreement.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Anikeeper is held as to 75% and 25% by Ms. Chen and Mr. Chen, respectively. Ms. Chen is the spouse of Mr. Lou Guoqiang, a brother of Dr. Lou Boliang and Mr. Lou Xiaoqiang, our executive Directors. Therefore, Ms. Chen is an associate of Dr. Lou Boliang and Mr. Lou Xiaoqiang and thereby a connected person of the Company, and the transaction contemplated under the Acquisition Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the transaction under the Acquisition Agreement is more than 0.1% but less than 5%, the transaction contemplated under the Acquisition Agreement is subject to the reporting and announcement requirements but exempt from the circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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THE ACQUISITION

The Board announces that on March 25, 2022, the Board approved the entering into of the Acquisition Agreement. The Acquisition Agreement is expected to be entered into among the Company, Ms. Chen, Mr. Chen and Anikeeper by the middle of June 2022, pursuant to which the Company shall conditionally agree to acquire 100% equity interest in Anikeeper.

Date of approval:

March 25, 2022

Parties: (1) the Company, as the purchaser; (2) the Vendors, as the vendors; and (3) Anikeeper, as the target company. Subject matter: Pursuant to the Acquisition Agreement, the Company shall conditionally agree to acquire and the Vendors shall conditionally agree to sell 100% equity interest in Anikeeper.

Consideration: The initial consideration of the Acquisition shall be RMB83.60 million, which may be subject to adjustment in the event that Anikeeper’s assets, liabilities and working capital position as of the Completion Date differs from that as of December 31, 2021. Where any such adjustment is applicable, the consideration of the Acquisition shall be adjusted as follows:

RMB83.60 million + (cash balance of Anikeeper as of the Completion Date – cash balance of Anikeeper as of December, 31, 2021) – (amount of liabilities of Anikeeper as of the Completion Date – amount of liabilities of Anikeeper as of December, 31, 2021) + (working capital of Anikeeper as of the Completion Date – working capital of Anikeeper as of December, 31, 2021).

(the “ Consideration ”)

The Company expects that such adjustment (if any) will not result in the Acquisition being subject to the circular and shareholders’ approval requirements under Chapter 14A of the Listing Rules (the “ Approval Requirements ”). In the unlikely event that the such adjustment results in the Acquisition being subject to the Approval Requirements, the Company will comply with such Approval Requirements as and when necessary.

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The Consideration is tax inclusive, and shall be paid in cash in the following manner:

1. RMB41.80 million shall be paid within five Business Days upon the satisfaction of all the conditions precedent or otherwise waived by the Company to the Acquisition Agreement; and

2. the remainder shall be paid within five Business Days upon (i) the completion of the registration for change in relation to the Acquisition issued by the relevant market supervision administration, and (ii) the satisfaction of condition precedent (i), (viii), (ix), (x) and (xi) set forth below.

The Consideration was arrived at after arm’s length negotiations with reference to the valuation of Anikeeper of RMB83.60 million as at December 31, 2021 prepared by an independent valuer and taking into account the potential benefits of the Acquisition as set out in the paragraph headed “REASONS FOR AND BENEFITS OF THE ACQUISITION” below.

The Consideration will be financed by internal resources of the Group.

Conditions precedent:

The Completion is conditional upon the satisfaction or otherwise waived by the Company of the following conditions:

• (i) no material adverse change to the business and basic conditions of Anikeeper having been occurred;

• (ii) the Company having completed its due diligence review in respect of the business, legal affairs, and financial conditions of Anikeeper and the results of such review being satisfactory to the Company;

• (iii) the issues identified by the Company during the foregoing due diligence process and required to be rectified by Anikeeper having been fully addressed to the Company’s satisfaction (if any);

• (iv) documents in relation to the Acquisition including the Acquisition Agreement, articles of association of Anikeeper and the shareholders’ resolutions of Anikeeper having been duly signed and delivered to the Company;

• (v) all necessary internal authorisations, approvals and consents of the Company in relation to the Acquisition having been obtained and all disclosure requirements or procedures in relation to the Acquisition having been complied with;

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• (vi) all necessary internal authorisations, approvals and consents of Anikeeper in relation to the Acquisition and authorisations, approvals and consents required (if applicable) from any other third party in relation to the Acquisition having been obtained;

• (vii) certain core management and key personnel of Anikeeper having entered into labour or service agreements, non-competition agreements and intellectual property assignment agreements with Anikeeper, the content and form of which are to the Company’s satisfaction;

• (viii) all representations, warranties and covenants made by Vendors and Anikeeper in the Acquisition Agreement remaining true, complete and accurate in all material respects and not being breached in any material respect;

• (ix) no material adverse events affecting the business, technology, operations, legal and financial conditions of Anikeeper having been occurred;

• (x) no actual, pending or threated litigation or other events which may materially and adversely affect Anikeeper and the Acquisition; and

• (xi) Anikeeper and the Vendors having delivered all relevant documents to the Company and completed all actions as required for Completion as stipulated under the Acquisition Agreement.

Completion Date:

• Completion shall take place within five Business Days upon the satisfaction of all the conditions precedent or otherwise waived by the Company to the Acquisition Agreement but in any event on or before June 30, 2022.

INFORMATION ABOUT THE PARTIES TO THE ACQUISITION AGREEMENT

The Company and the Group

The Company was established under the laws of the PRC with limited liability, and its Shares are listed on the Shenzhen Stock Exchange and the Main Board of the Stock Exchange. It is a leading fully-integrated pharmaceutical R&D services platform with global operations to accelerate drug innovation for its customers.

The Vendors

Ms. Chen is the spouse of Mr. Lou Guoqiang, a brother of Dr. Lou Boliang and Mr. Lou Xiaoqiang, our executive Directors, and is therefore a connected person of the Company.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Mr. Chen is a third party independent of the Company and connected persons of the Company.

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Anikeeper

Anikeeper is a limited company established in the PRC and is principally engaged in the breeding and sales of laboratory animals such as mice for use in scientific experiments, and consultation services in relation to its products.

Set out below is a summary of the audited financial information of Anikeeper for the years ended 31 December 2020 and 2021, prepared in accordance with the generally accepted accounting principles in the PRC:

	For the year ended	For the year ended
	31 December	31 December
	2020	2021
	RMB	RMB
Revenue	13,538,265.36	12,526,415.73
Net profit before tax	7,224,851.67	5,511,027.70
Net profit after tax	6,431,416.75	4,812,766.66

The audited net asset value of Anikeeper as at December 31, 2021 was approximately RMB14,208,251.60.

Ms. Chen and Mr. Chen were two of the three founding shareholders of Anikeeper, and owned Anikeeper as to 25% and 25%, respectively, upon the establishment of Anikeeper. In November 2020, Ms. Chen acquired 50% equity interests in Anikeeper from the rest shareholder which was controlled by Mr. Lou Guoqiang and Ms. Chen at a consideration of RMB5.0 million.

Upon Completion, Anikeeper will become a wholly-owned subsidiary of the Company and the financial results of Anikeeper will be consolidated into the Company’s financial results.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Company needs laboratory animals for the provision of pharmacology services, and Anikeeper is one of the providers of such laboratory animals in the PRC The Acquisition therefore allows the Company to further strengthen its capabilities in quality control of experimental animals, optimize the its experimental animal supply system, and enhance its capabilities in the bioscience area such as drug safety assessment.

The Directors (including the independent non-executive Directors) are of the view that the transaction contemplated under the Acquisition Agreement is in the ordinary and usual course of business of the Group and on normal commercial terms, and is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Board has approved the entering into of the Acquisition Agreement and the transaction contemplated under the Acquisition Agreement. Dr. Lou Boliang, Mr. Lou Xiaoqiang and Ms. Zheng Bei (the spouse of Mr. Lou Xiaoqiang) have abstained from voting on the board resolution for approving the entering into of the Acquisition Agreement and the transaction contemplated thereunder. Save as disclosed above, none of the Directors have a material interest in the Acquisition and hence, no other Directors has abstained from voting on such board resolution.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, Anikeeper is held as to 75% and 25% by Ms. Chen and Mr. Chen, respectively. Ms. Chen is the spouse of Mr. Lou Guoqiang, a brother of Dr. Lou Boliang and Mr. Lou Xiaoqiang, our executive Directors. Therefore, Ms. Chen is an associate of Dr. Lou Boliang and Mr. Lou Xiaoqiang and thereby a connected person of the Company, and the transaction contemplated under the Acquisition Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the transaction under the Acquisition Agreement is more than 0.1% but less than 5%, the transaction contemplated under the Acquisition Agreement is subject to the reporting and announcement requirements but exempt from the circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

DEFINITIONS

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

“A Shares”	ordinary share(s) of the Company with nominal value of RMB1.00
	each listed on the Shenzhen Stock Exchange
“Acquisition”	the acquisition of the Sale Interest
“Acquisition Agreement”	the acquisition agreement to be entered into among the Company,
	the Vendors and Anikeeper in relation to the Acquisition
“Anikeeper”	Beijing Anikeepter Biotech Co., Ltd.* (北京安凱毅博生物技術
	有限公司), a limited company established under the laws of the
	PRC
“Board”	the board of Directors of the Company
“Business Day(s)”	day(s) on which commercial banks are open for business in the
	PRC (excluding Saturdays, Sundays and public holidays)
“Company”	Pharmaron Beijing Co., Ltd.* (康龍化成（北京）新藥技術股份
	有限公司), a joint stock limited company incorporated under the
	laws of the PRC on July 1, 2004, the A Shares of which are listed
	on the Shenzhen Stock Exchange (stock code: 300759) and the H
	Shares of which are listed on the Main Board of the Hong Kong
	Stock Exchange (stock code: 3759)
“Completion”	completion of the Acquisition pursuant to the terms and
	conditions of the Acquisition Agreement
“Completion Date”	the date on which Completion takes place
“Director(s)”	the director(s) of the Company

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“Group”

the Company and its subsidiaries

“H Share(s)” overseas listed foreign invested ordinary share(s) in the share capital of the Company, with a nominal value of RMB1.00 each, which are listed for trading on the Hong Kong Stock Exchange and traded in HK dollars “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as amended from time to time “PRC” the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purposes of this announcement “RMB” Renminbi, the lawful currency of the PRC “Sale Interest” 100% of the equity interest in Anikeeper “Share(s)” the ordinary shares of our Company with a nominal value of RMB1.00 each, comprising A Shares and H Shares “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “%” per cent

In this announcement, the terms “associate”, “connected person”, “controlling shareholder”, “percentage ratios” and “subsidiary” have the meanings given to such terms in the Listing Rules, unless the context otherwise requires.

By order of the Board Pharmaron Beijing Co., Ltd.* 康龍化成（北京）新藥技術股份有限公司 Dr. Lou Boliang Chairman

Beijing, the PRC March 27, 2022

As at the date of this announcement, the Board of Directors comprises Dr. Lou Boliang, Mr. Lo Xiaoqiang and Ms. Zheng Bei as executive Directors; Mr. Chen Pingjin, Mr. Hu Baifeng, Mr. Li Jiaqing and Mr. Zhou Hongbin as non-executive Directors; Mr. Dai Lixin, Ms. Chen Guoqin, Mr.Tsang Kwan Hung Benson and Mr. Yu Jian as independent non-executive Directors.

• For identification purposes only

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