PATEO (02889.HK): Completes Acquisition of 70% Target Stake; Consideration Capped at RMB1.4bn

NewTimeSpace News: On 2 October 2026, PATEO CONNECT Technology (Shanghai) Corporation (stock code: 02889) announced that the discloseable transaction regarding the acquisition of the target company's equity was completed on 2 October 2026 in accordance with the share transfer agreement: upon completion, the Company holds 53,518,613 shares of the target company, representing approximately 70% of its total issued shares, and the target company has become a non-wholly-owned subsidiary of the Company whose financial results will be consolidated into the Group's consolidated financial statements.

On the valuation, the Company engaged an independent third-party valuer, which adopted the listed-company comparison method under the market approach and selected Xiamen Youxun Chip, Jiangsu Maxscend Microelectronics and Henan Shijia Photons Technology as comparables, with adjusted EV/S multiples of 18.14x, 8.87x and 11.05x respectively (average 12.69x). Based on the target's 2025 revenue of RMB305 million and the adjusted average EV/S of 12.69x, the enterprise value was RMB3,872 million; after adjustments and applying a 30.8% discount for lack of marketability, the market value of 100% of the target's total equity (rounded) was RMB2,700 million, with the 70% interest at RMB1,890 million on a pro rata basis.

The maximum consideration of RMB1,400 million was determined through arm's-length negotiation on normal commercial terms, with loans accounting for no more than 70% of the consideration and the balance funded by the acquirer from its own funds; the Company confirmed that no IPO proceeds were used to pay the consideration.

The transferors have undertaken that the target's audited consolidated total revenue for FY2026, FY2027 and FY2028 will be not less than RMB480 million, RMB620 million and RMB800 million respectively, and annual pre-tax profit not less than RMB45 million, RMB90 million and RMB120 million respectively; if the overall completion ratio falls below 70%, the consideration will be adjusted, with cash compensation capped at RMB100 million. The Company may further acquire the remaining 30% at a valuation cap of RMB2,500 million (a cap only, not a fixed valuation), conditional on the stability of the 40-member core team (at least 90% unchanged) and ex-tax orders exceeding RMB250 million from selected key customers between 1 January 2026 and 30 June 2027.

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