Securities code: Lbx Pharmacy Chain Joint Stock Company(603883) securities abbreviation: Lbx Pharmacy Chain Joint Stock Company(603883) Announcement No.: 2022015 Lbx Pharmacy Chain Joint Stock Company(603883)
About terminating the acquisition of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd
Announcement of 51% equity
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
Important content tips:
● Lbx Pharmacy Chain Joint Stock Company(603883) (hereinafter referred to as “the company” or ” Lbx Pharmacy Chain Joint Stock Company(603883) “) held the 13th meeting of the 4th board of directors on March 6, 2022, deliberated and approved the proposal on terminating the acquisition of 51% equity of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd., and the company decided to terminate the contract with Zhang Weijun, Tian Jinping Ma Zhirong and Guo Zhihong (hereinafter referred to as the “seller” or “counterparty”) signed the equity acquisition agreement and the supplementary agreement to the equity acquisition agreement (hereinafter referred to as the “transaction agreement”) to terminate this acquisition.
● the cancellation of the transaction agreement is due to the seller’s failure to complete the contractual obligations such as asset divestiture and underlying equity delivery of the target company within the agreed time, the seller has seriously breached the contract, the cancellation conditions agreed in the equity acquisition agreement have been met, the company has made the cancellation decision in accordance with the equity acquisition agreement and legal provisions, and has notified the seller in accordance with the law.
● whereas the company has paid the seller the first advance payment of 285.6 million yuan for this transaction in accordance with the equity acquisition agreement. After the termination of this acquisition, the company will require the seller to return the first advance payment of 285.6 million yuan, pay liquidated damages of 10% of the paid amount, and compensate all economic losses caused to the company in accordance with the equity acquisition agreement. However, there is a risk that the seller delays or refuses to return, resulting in the company’s failure to timely or recover the paid items. If the seller delays or refuses to return the first advance payment, the company will actively negotiate with the other party or take legal means such as litigation to claim rights, so as to ensure that the interests of the company will not be damaged.
The company will continue to follow up the progress of the above matters and fulfill the corresponding information disclosure obligations in time. Please pay attention to the investment risks.
1、 Overview of this transaction
1. The company held the 8th meeting of the 4th board of directors on August 24, 2021, deliberated and passed the proposal on the company’s acquisition of 51% equity of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd. on the same day, the company (as the buyer) and Zhang Weijun, Tian Jinping Ma Zhirong and Guo Zhihong (as the seller) signed the equity acquisition agreement and the supplementary agreement to the equity acquisition agreement, and agreed that the company would purchase 51% equity (hereinafter referred to as the “target equity”) of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd. (hereinafter referred to as “Huatuo pharmacy”) with RMB 1428 million in cash. For details, see the announcement of Lbx Pharmacy Chain Joint Stock Company(603883) on purchasing 51% equity of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd. (Announcement No.: 2021091) disclosed by the company on August 25, 2021.
2. According to the equity acquisition agreement, the company paid the seller the first advance payment of RMB 285.6 million on August 30, 2021.
The review of the State Administration of antitrust market supervision was passed on March 30, 2021. 4. On December 25, 2021, the company disclosed the progress announcement of Lbx Pharmacy Chain Joint Stock Company(603883) acquisition of 51% equity of Hebei Huatuo pharmacy pharmaceutical chain Co., Ltd., announced the progress of asset divestiture and the transfer of underlying equity, and prompted the risk of uncertainty whether the subsequent equity delivery and relevant industrial and commercial changes can be successfully completed.
2、 Reasons for termination of equity acquisition
1. According to the equity acquisition agreement, the seller must complete the stripping of relevant real estate and land of the target company within 90 calendar days after the equity acquisition agreement takes effect. After the seller completes the divestiture of the assets of the target company and passes the antitrust review, it shall complete the registration of equity change and the re-election of the board of directors of this transaction within 20 working days, and complete other delivery contents within 30 working days. The buyer may unilaterally terminate the contract if it is overdue for 60 days.
2. Both parties signed the equity acquisition agreement on August 24, 2021. The company paid the first advance payment on time according to the equity acquisition agreement, promoted the completion of the antitrust review of the transaction, and actively urged the seller to carry out asset stripping and delivery. As of February 15, 2022, the seller had not completed the agreed obligations of asset stripping and underlying equity delivery. On February 16, 2022, the company sent a letter on urging the seller to handle the equity delivery procedures of Huatuo company, and the seller did not reply; On February 25, 2022, the company sent the letter on urging the seller to fulfill the equity acquisition agreement. The seller replied on February 28, 2022 that “two letters have been received; at present, the asset stripping is still in progress”. As of March 6, 2022 (the date of the 13th meeting of the Fourth Board of directors held by the company), the seller has not completed the agreed obligations of asset stripping and underlying equity delivery. The seller has seriously breached the contract, and the cancellation conditions agreed in the equity acquisition agreement have been fulfilled. In order to safeguard the overall interests of the company, after deliberation by the board of directors, the company decided to terminate the transaction agreement and terminate the acquisition in accordance with the equity acquisition agreement; The company sent a letter to the seller on March 6, 2022 to terminate the transaction agreement. The company organizes a lawyer team to assist the company in dealing with follow-up matters.
3、 Impact of breach of contract and termination of equity acquisition on the company
1. Provisions on breach of contract
The cancellation of the transaction agreement is due to the seller’s failure to complete the contractual obligations such as asset stripping and underlying equity delivery of the target company within the agreed time, the seller has seriously breached the contract, the cancellation conditions agreed in the equity acquisition agreement have been met, the company has made the cancellation decision in accordance with the equity acquisition agreement and legal provisions, and has notified the seller in accordance with the law.
According to Article 14.3 of the equity acquisition agreement, “If either party unilaterally terminates this Agreement without justified reasons, or the contract is terminated due to one party’s breach of contract, the unilaterally terminating party and the breaching party shall pay 10% of the paid transfer price to the other party as liquidated damages; if losses are caused to the other party or the target company, it shall also compensate all economic losses. If Party B (referring to the seller) breaches the contract, it shall return all the money received on the date of termination of the agreement.” 。
2. Impact on the company
(1) The termination of the equity acquisition will not affect the normal operation of the company’s existing business.
(2) The company has paid 285.6 million yuan to the seller. There is a risk that the paid items cannot be recovered in time or not, which may have a certain impact on the company’s capital arrangement.
4、 Risk tips
Since the company has paid the seller the first advance payment of 285.6 million yuan for this transaction in accordance with the equity acquisition agreement, after terminating this acquisition, the company will require the seller to return the first advance payment of 285.6 million yuan and pay liquidated damages of 10% of the paid amount in accordance with the equity acquisition agreement, and compensate for all economic losses caused to the company.
Although the equity acquisition agreement clearly stipulates the return of the first advance payment, there is still a risk that the seller cannot return or refuse to return the first advance payment on time, resulting in the company’s failure to recover or recover the paid items in time. If the seller delays or refuses to return the first advance payment, the company will actively negotiate with the other party or take legal means such as litigation to claim rights, so as to ensure that the interests of the company will not be damaged.
The company will continue to follow up the progress of the above matters and fulfill the corresponding information disclosure obligations in time. Please pay attention to the investment risks.
5、 Documents for future reference
1. Lbx Pharmacy Chain Joint Stock Company(603883) the resolution of the 13th meeting of the 4th board of directors
It is hereby announced.
Lbx Pharmacy Chain Joint Stock Company(603883) board of directors March 6, 2022
