Tianli International Holdings Ltd. (TIANLI INT HLDG) will invest up to RMB 244.80 million to acquire majority control of an unnamed mainland China art-education provider (“Target Company”) through a two-step transaction combining an equity purchase and a capital increase.
Transaction structure and valuation • Step 1: Immediate purchase of 10% of the Target Company from existing shareholders for RMB 104.00 million. • Step 2: Capital injection of RMB 140.80 million into the Target Company, lifting Tianli’s ownership to 51% and transferring control. • Aggregate outlay of RMB 244.80 million is below the pro-rata post-investment valuation of RMB 249.67 million based on the Valuer’s pre-investment appraisal of RMB 348.74 million (31 Aug 2025) plus the planned capital injection. • An updated valuation as at 31 Mar 2026, using a market approach and a 4.04x adjusted EV/EBITDA multiple, values 100% of the Target at RMB 358.62 million. Including the capital increase, the implied post-money valuation rises to RMB 499.42 million, only 2.8% above the original estimate, supporting management’s view of pricing fairness.
Target Company profile and recent performance • Focus: art Gaokao training, art-education integration and children’s literacy. • Scale: nine training centres across seven provinces, teaching c.5,000 Grade 12 students and serving 32,000 students annually. • Latest twelve months to 31 Mar 2026: revenue RMB 297.17 million, EBITDA RMB 109.34 million, net profit RMB 37.18 million; net liabilities stood at RMB 17.87 million.
Payment timetable and safeguards • Equity transfer (RMB 104.00 million) to be settled in four instalments. • Capital increase (RMB 140.80 million) to be paid in three instalments, each subject to fulfilment of specified conditions, including rectification of outstanding school and food-service licences. • Additional investment of up to RMB 50.00 million is contingent on further conditions and may be waived. • If conditions precedent are not met, Tianli may terminate the deal; the Target’s existing shareholders and their owners must repurchase Tianli’s stake at cost plus 5% annual simple interest, secured by a pledge over all remaining Target equity.
Performance guarantee • Chongqing Huajing Industrial Co. and its shareholders guarantee aggregate audited net profit targets for 1 Mar 2027–31 Aug 2028; cash shortfall compensation is payable within three months of audit confirmation, with restrictions on equity disposals until liabilities are settled.
Financial impact on Tianli • Net external cash outflow initially limited to the RMB 104.00 million equity payment; the RMB 140.80 million capital increase and any subsequent RMB 50.00 million injection remain within the consolidated group post-completion. • Management expects an immediate reduction of cash and current assets—and a matching rise in net current liabilities—of roughly RMB 104.00 million, before consolidation of the Target’s assets and liabilities.
Strategic rationale The acquisition expands Tianli’s footprint into China’s art-education market, complements existing K-12 operations, and provides cross-selling and student-diversion opportunities. Management plans to integrate the Target into Tianli’s finance, legal and internal-control systems following completion.
Regulatory and risk considerations The Target is addressing past gaps in operational and food licences, tax documentation, and social-insurance contributions; fulfilment of these rectifications is embedded in deal conditions. Tianli views the staged payment, repurchase undertakings and equity pledges as adequate protections against execution and performance risk.
Listing Rules compliance The board classifies the repurchase covenant as a contingent remedy rather than an immediately exercisable option; any future activation will be assessed for further disclosure obligations under Chapter 14 and Rule 14.36B of the HKEX Listing Rules.