PATEO (02889.HK): Acquires 20% Equity of Seagull Kitchen & Bath for RMB 800 Million and Becomes Controlling Shareholder, Constituting a Major Transaction

NewTimeSpace News: On 21 August 2026, PATEO CONNECT Technology (Shanghai) Corporation (02889.HK) announced that the company, the seller Zhongyu Investment and other parties (Zhongsheng Group and Tang Taiying) entered into a share transfer agreement, under which the company conditionally agreed to acquire 129,211,208 A shares of Guangzhou Seagull Kitchen and Bath Products Co., Ltd. (002084.SZ) held by the seller, representing 20% of the target company's total issued share capital, for a consideration of RMB 800,000,000, or approximately RMB 6.19 per A share. Upon completion, the company will hold 20% of the target company and become its controlling shareholder.

As of the announcement date, the seller has received the first earnest money of RMB 10,000,000; the company shall pay the remaining earnest money of RMB 190,000,000 within 15 business days of the share transfer agreement date. The consideration will be paid in cash, funded by own and/or legally self-raised funds, with own funds accounting for no less than 50%. The consideration is payable in four instalments: RMB 200,000,000 (within 2 business days after shareholders' approval); the earnest money of RMB 200,000,000 already paid will automatically convert into the second instalment with a simultaneous third instalment of RMB 320,000,000; RMB 80,000,000 within 2 business days of share transfer registration; and the remaining RMB 80,000,000 upon completion of the target's governance restructuring. The company has undertaken not to transfer the target shares within 60 months after completion and not to pledge them within 36 months.

For valuation, the company engaged Zhejiang Zhonglian Asset Appraisal Co., Ltd., which valued the market value of the target's total shareholders' equity at RMB 3,846.00 million as of the valuation base date (14 August 2026), using the comparable company method under the market approach with reference to three comparable companies — Xiamen Songlin Technology (603992.SH), Jiangxi Aifenda Heating Technology (301575.SZ) and Diou Shuihua Group (002798.SZ); P/B had the highest goodness of fit (R²=0.7782) and was adopted as the value ratio, adjusted by the average control premium of 16.39%, corresponding to approximately RMB 5.95 per A share. The target group is principally engaged in the R&D, manufacturing and services of all categories of components for assembled integrated kitchen and bathroom spaces, including high-end sanitary ware, ceramics, bathtubs, shower rooms, bathroom cabinets, integrated cabinets and tiles.

As the applicable percentage ratios are expected to exceed 25% but not exceed 100%, the acquisition constitutes a potential major transaction subject to notification, announcement, circular and shareholders' approval requirements. The share transfer agreement is conditional upon approval at a general meeting, and completion of the share transfer is also subject to the SZSE compliance confirmation and registration procedures with the securities depository; the acquisition may or may not proceed. A circular is expected to be published on or before 21 October 2026. The transaction also includes performance commitments: for each full fiscal year from 1 January 2027 during the commitment period, the existing business's audited net profit attributable to parent shareholders shall be no less than RMB 1 million with positive operating cash flow, with compensation payable for any shortfall.

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