Chongqing Heavy Pharmaceutical Co., Ltd. plans to acquire 3.35% shares of Chongqing pharmaceutical Co., Ltd. with RMB 337 million

On November 13, Chongqing Pharmaceutical Group Co., Ltd issued a notice on the acquisition of minority shareholders' equity of Chongqing pharmaceutical (Group) Co., Ltd., and Chongqing Pharmaceutical Group Co., Ltd planned to acquire 3.35% of Chongqing pharmaceutical Co., Ltd shares with a total value of 337 million yuan The announcement shows that the background of this transaction is: in 2017, Sinopharm holdings purchased 96.59% of the total shares of Chongqing pharmaceutical Co., Ltd held by the counterparties such as chemical medicine group, Shenzhen Maoye, Maoye commerce, etc by way of issuing shares (for details, please refer to the sale of major assets and issuance of shares to purchase assets and related transactions of Chongqing Jianfeng Chemical Co., Ltd announced by Sinopharm holdings on July 25, 2017 As disclosed in the report, hereinafter referred to as "2017 major asset restructuring") In order to prevent the potential adverse effect of the defective issues in the history of Chongqing pharmaceutical and its subordinate companies on the implementation of 2017's major asset restructuring, chemical medical group, Shenzhen Maoye and Maoye business respectively committed to retain 14498692 shares, 387472 shares and 193736 shares of Chongqing pharmaceutical as the subject assets to participate in 2017's major asset restructuring In order to solve the problem of joint investment with indirect controlling shareholders to establish subsidiaries and improve the efficiency of decision-making management, it is also a leftover problem of reserving shares to solve potential equity disputes when the company implements major asset restructuring in 2017 Chongqing pharmaceutical Co., Ltd plans to purchase 3.35% shares of Chongqing pharmaceutical Co., Ltd., Shenzhen Maoye and Maoye commerce with cash of 337.207 million yuan After the acquisition, Chongqing pharmaceutical Co., Ltd will hold 99.94% shares of Chongqing pharmaceutical Co., Ltd Therefore, the main purposes of the acquisition of Chongqing pharmaceutical Co., Ltd are as follows: (1) to eliminate the co investment relationship with the indirect controlling shareholders At present, the company holds 96.59% of the equity of Chongqing pharmaceutical Co., Ltd., and the indirect controlling shareholder of Chongqing pharmaceutical Co., Ltd holds 3.22% of the equity of Chongqing pharmaceutical Co., Ltd., Chongqing pharmaceutical Co., Ltd is an enterprise jointly invested by the company and the indirect controlling shareholders The completion of this acquisition can eliminate the above-mentioned co investment relationship with indirect controlling shareholders, and further improve the efficiency of the company's management decision-making on Chongqing pharmaceutical Chongqing pharmaceutical can also better implement the future development plan of Chongqing pharmaceutical Holding Co., Ltd It is in line with the overall development strategic plan of listed companies, and is conducive to the better optimization of the overall resource allocation of listed companies （2） To solve the problems left by the company's major asset restructuring in 2017, the company carried out a major asset restructuring in 2017, and purchased 96.59% equity of Chongqing pharmaceutical Co., Ltd held by Chongqing Pharmaceutical Group Co., Ltd through issuing shares The remaining 3.41% of Chongqing pharmaceutical's equity has not been injected into the listed company, which is held by nine shareholders including chemical medicine group, Shenzhen Maoye and Maoye business Among them, the 3.35% shares of Chongqing pharmaceutical held by chemical medicine group, Shenzhen Maoye and Maoye commerce are reserved to prevent potential disputes in the issuance of employee shares in the history of Chongqing Pharmaceutical (for details, please refer to the report on sale of major assets and issuance of shares to purchase assets and related transactions disclosed by the company on cninfo on July 25, 2017) Chongqing pharmaceutical has published newspapers for many times in its history, and Chongqing Pharmaceutical Holdings has announced relevant matters of Chongqing pharmaceutical employee shares for many times Up to now, Chongqing pharmaceutical has not had a lawsuit or other disputes caused by the defect of employee shares And because the vast majority of employees have completed the collection of the refund of employee stock clearing, it is unnecessary to reserve the above shares for a long time without injecting them into the listed company At the same time, Chongqing Pharmaceutical Holdings said that the investment income of this acquisition is guaranteed, Chongqing pharmaceutical has a good profitability, and has maintained a high-speed growth trend in recent years In 2017, it achieved a net profit of 631117100 yuan, and in 2018, it achieved a net profit of 714344200 yuan, which will also ensure a stable growth rate in the future After the completion of this acquisition, it can improve the level of net profit attributable to the parent company of Chongqing Pharmaceutical Holdings, reduce the diluted impact of minority equity of Chongqing pharmaceutical on the consolidated profit of Chongqing Pharmaceutical Holdings, and enhance the company's sustainable profitability 37