Announcement Regarding the Company's Acquisition of Intangible Assets and Related Party Transaction
Important Content Notice:
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The parties to this related party transaction are Guaibao Pet Food Group Co., Ltd. (hereinafter "the Company") and the related party K9 Natural Food Limited (hereinafter "K9 Natural"). The Company intends to use its own funds, not exceeding 225 million RMB, to acquire the intellectual property and other target assets held by K9 Natural, which are exclusively used for operating the "NPFG brand" in mainland China (referring to all trademarks, trade names, logos, packaging designs, visual identity systems, domain names, and other brand-related elements owned by K9 Natural for K9 Natural & Feline Natural pet food and related products, including but not limited to trademarks registered or being registered by K9 Natural). Both parties intend to engage in strategic cooperation regarding the supply chain resources of the "NPFG brand." The transaction consideration includes an initial payment, a fixed balance, and a floating balance (if any). The total amount of the initial payment and fixed balance is 125 million RMB in USD equivalent. The floating balance will be determined based on the total sales and operating profit margin of "NPFG brand" products achieved by the Company in mainland China within the twelve months prior to the agreed settlement termination date (no later than December 31, 2028). If the agreed sales total (300 million RMB or 500 million RMB) is reached during the specified settlement period and the operating profit margin is positive, the Company shall pay an additional consideration of 50 million RMB or 100 million RMB in USD equivalent.
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Director Wang Chen of the Company also serves as a director of Natural Pet Food Group Limited. Natural Pet Food Group Limited holds 100% of the equity of K9 Natural. Furthermore, Golden Prosperity Investment S.A.R.L., a shareholder holding more than 5% of the Company's shares, has an ultimate actual controller of KKR & Co. Inc. after looking through its equity structure; K9 Natural's ultimate actual controller is also KKR & Co. Inc. after looking through its equity structure. This transaction constitutes a related party transaction but does not constitute a major asset restructuring as defined by the "Administrative Measures for Major Asset Restructuring of Listed Companies," and there are no major legal obstacles to the implementation of the transaction.
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This transaction has been reviewed and approved at the 18th meeting of the second session of the Board of Directors. Related directors abstained from voting on this proposal. This transaction does not need to be submitted to the general meeting of shareholders for approval. The contract involved in this related party transaction has not yet been signed.
I. Overview of the Related Party Transaction
The Company intends to use its own funds not exceeding 225 million RMB to acquire the intellectual property and other target assets held by K9 Natural, which are exclusively used for operating the "NPFG brand" in mainland China. Both parties intend to engage in strategic cooperation regarding the supply chain resources of the "NPFG brand." The transaction consideration includes an initial payment, a fixed balance, and a floating balance (if any). The total amount of the initial payment and fixed balance is 125 million RMB in USD equivalent. The floating balance (if any) will be determined based on the total sales and operating profit margin of "NPFG brand" products achieved by the Company in mainland China within the twelve months prior to the earlier of the date of company division, merger, dissolution, liquidation, change of control as stipulated by the laws of the country of incorporation of K9 Natural, or December 31, 2028 (hereinafter "Settlement Period"). If the agreed sales total (300 million RMB or 500 million RMB) is reached during the Settlement Period and the operating profit margin is positive, the Company shall pay an additional consideration of 50 million RMB or 100 million RMB in USD equivalent.