Hubei Xingfa Chemicals Group Co., Ltd. (SHSE:600141) signed an agreement to acquire the remaining 50% stake in Hubei Xingrui Chemical Co., Ltd. from Yichang Xingfa Group Co., Ltd. and Zhejiang Jinfanda Biochemical Co., Ltd. for CNY 1.9 billion on January 3, 2019. Consideration will be paid through issuance of Hubei Xingfa Chemicals Group's stock. Hubei Xingfa Chemicals will issue 183.6 million shares as a part of consideration. Yichang Xingfa will receive 73.4 million shares representing approximately CNY 710 million and Zhejiang Jinfanda Biochemical will receive 110.1 million shares representing CNY 1.1 billion. Transaction price will be based on the evaluation results issued by the asset appraisal institution with securities business qualification and filed by the state-owned assets supervision and administration department or its authorized unit, and shall be determined by the parties to the transaction. As of June 16, 2019, the issue price of shares is changed and the number of shares to be issued is adjusted to 187.4 million. After completion, Hubei Xingfa Chemicals Group Co., Ltd. will own 100% stake in Hubei Xingrui Silicon Material Co., Ltd. Yichang Xingfa will receive 74.97 million shares and Zhejiang Jinfanda Biochemical will receive 112.46 million shares.

During the financial year ended December 2018, Hubei Xingrui Silicon reported total assets of CNY 3.8 billion, revenue of CNY 4.8 billion, net profit of CNY 702.5 million and net assets of CNY 1.5 billion. The transaction is subject to approval from regulatory board and approval from shareholders of Hubei Xingfa Chemicals Group Co., Ltd., State-Owned Assets Supervision and China Securities Regulatory Commission. The transaction was approved by the Board of Directors of Yichang Xingfa Group Co., Ltd., Zhejiang Jinfanda Biochemical Stock Co., Ltd. and Hubei Xingfa Chemicals Group Co., Ltd. on January 3, 2019. As on March 23, 2019 transaction has been further approved by the Board of Directors of Yichang Xingfa, Zhejiang Jinfanda and Hubei Xingfa Chemicals. On April 16, 2019, Hubei Xingfa Chemicals Group Co., Ltd. received approval from the State-owned Assets Supervision and Administration Commission of Yichang Municipal People's Government of Hubei Province ([2019] No. 3) to issue shares for consideration and raise matching funds. This approval is valid only for the company's plan to purchase shares and raise matching funds. The issuance of shares to purchase assets and raise matching funds is still subject to the shareholders' meeting for deliberation and approval, and can be implemented after approval by the China Securities Regulatory Commission. On April 22, 2019, the transaction is approved by shareholders of Hubei Xingfa Chemicals Group. As of August 2, 2019, China Securities Regulatory Commission has approved the transaction.

Li Linqiang, Liao Xiaosi, Chen Yacong, Zhong Chunlan, Chu Xiaoteng and Yang Chi of Tianfeng Securities Co., Ltd. acted as financial advisors, Pan Xiuping and Xu Yang of Longan Law Firm acted as legal advisors and Liu Hanjun and Chen Haiyan of Peking Certified Public Accountants Co., Ltd. acted as accountants to Hubei Xingfa Chemicals Group Co., Ltd.