Zhonglu Co., Ltd. (SHSE:900915) signed a conditional acquisition agreement to acquire Shanghai Yuemu Cosmetics Co., Ltd. from Huang Xiaodong, Zhang Mu, Cheng Rong and Shanghai Xieli Investment Center (Limited Partnership) for CNY 5.6 billion on January 17, 2018. Under the terms of the transaction, Zhonglu Co., Ltd. will issue total of 227.05 million shares at a price of CNY 20.26 per share and pay cash of CNY 1 billion. Huang Xiaodong and Zhang Mu will be paid via cash of CNY 500 million and issued 65.2 million stocks, respectively. Cheng Rong and Shanghai Xieli Investment Center (Limited Partnership) will be issued 69.1 million and 27.6 million shares, respectively. Under the new terms of amendment dated May 29, 2018, Zhonglu Co., Ltd. will issue total of 224.58 million shares and pay cash of CNY 950 million. As on November 10, 2018, the terms of transaction were revised, Zhonglu Co., Ltd. will pay CNY 1.1 billion in cash and issue 272.7 million shares; Huang Xiaodong and Zhang Mu will receive CNY 541.1 million each in cash and 70.9 million shares each, Chen Rong will receive 93.5 million shares and Shanghai Xieli Investment Center (Limited Partnership) will receive 37.4 million shares.

Zhonglu Co., Ltd. will raise supporting funds of CNY 1.4 billion which shall not exceed 20% of its total share capital prior to this transaction. Under new amendment May 29, 2018, Zhonglu Co., Ltd. will raise supporting funds of CNY 1.4 billion. The funds from the placement will be used to fund the transaction. As per the update in November 2018, Zhonglu Co., Ltd. intends to raise CNY 1.5 billion, which will be used to fund the cash consideration of the transaction.

The transaction is subject to approval from shareholders of Zhonglu Co., Ltd. and China Securities Regulatory Commission. The transaction has been approved by the shareholders of Shanghai YueMu Cosmetics Co., Ltd on January 16, 2018. The transaction has been approved by the Board of Directors of Zhonglu Co., Ltd. during the 35th session of the 8th directorate meeting on January 17, 2018. As on November 7, 2018, the shareholders of Shanghai YueMu Cosmetics Co., Ltd and Board of Zhonglu Co., Ltd. approved the amended plan.

Liu Xiaodan Luan Hongfei and Zuo Diand of Huatai United Securities Co., Ltd. acted as financial advisor; Zhang Xuebing, Li Jing and Xu Mo of Zhong Lun Law Firm acted as legal advisor; Liu Huowang and Deng Xiaoqin of Guangdong Zhengzhong Zhujiang Certified public Accountants and Zhu Jiandi and Fei Yi of BDO SHU LUN PAN Certified Public Accountants (Special General Partnership) acted as accountant to Zhonglu Co., Ltd. Ma Lihua, Yan Jijun and Luo Weizhong of Shanghai Shenwei Assets Evaluation Co., Ltd. acted as asset appraisal agency in the transaction.

Zhonglu Co., Ltd. (SHSE:900915) cancelled the acquisition of Shanghai Yuemu Cosmetics Co., Ltd. from Huang Xiaodong, Zhang Mu, Cheng Rong and Shanghai Xieli Investment Center (Limited Partnership) on January 17, 2019.