GCL TECH (03800.HK): Proposes RMB 2.5bn Acquisition of 81.91% of Sichuan GCL Lithium; Connected Transaction

NewTimeSpace News: On 19 October 2026, GCL Technology Holdings Limited (the "Company") voluntarily announced that it entered into a non-legally-binding memorandum of understanding with the seller, GCL Group Limited, in respect of the proposed acquisition of approximately 81.91% of the equity interest in Sichuan GCL Lithium Technology Co., Ltd. (the "target company"). Upon completion, the target company will become a non-wholly-owned subsidiary of the Company and its financial results will be consolidated into the Group's financial statements.

The announcement disclosed that the consideration is proposed to be determined based on a valuation of the target equity by an independent valuer, with a preliminary estimated amount of approximately RMB 2.5 billion (equivalent to approximately HKD 2,936.25 million); it is proposed to be settled by a combination of cash and consideration shares to be allotted and issued to the seller and/or its designated entities, comprising approximately RMB 650 million (approximately HKD 763.425 million) in cash and approximately RMB 1.85 billion (approximately HKD 2,172.825 million) in consideration shares. The issue price of the consideration shares may not be lower than the net asset value per share of approximately HKD 1.3 as at 30 June 2026; based on the minimum issue price, the total number of consideration shares is expected not to exceed 1,671 million. The transaction is expected to be structured as an equity transfer and/or capital injection that will enable the Company to obtain control of the target company.

The Company stated that the seller has undertaken and warranted that the target company's aggregate adjusted net profit for the two years ending 31 December 2027 and 31 December 2028 will be not less than RMB 620 million, and that the target company will develop a sixth-generation lithium iron phosphate cathode material product with a compaction density above 2.8g/cm³ by 31 December 2028; if these targets are not met, the seller must pay compensation to the Company out of the consideration from the expiry of the undertaking period. The Company must complete due diligence within 30 days from the date of the memorandum, and the exclusivity period is three months from that date; should a third party make a binding offer on materially better terms, the seller may notify the Company in writing and must give the Company no less than 10 business days to match. The target company is engaged in China in the research, development, production, sales and servicing of lithium iron phosphate cathode materials for new energy batteries; located in the economic development zone of Renshou County, Meishan City, Sichuan Province, its phase-one production facilities cover approximately 355 mu with total gross floor area of approximately 156,000 square metres, against overall planned land of 1,000 mu, with annual lithium iron phosphate capacity of 120,000 tonnes.

The Company stated that the seller is an indirect wholly-owned subsidiary of Asia Pacific Energy Fund Limited, ultimately held by a discretionary trust with Butterfield Trust (Asia) Limited as trustee and Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng) as beneficiaries, and is therefore an associate of Mr. Zhu Gongshan and Mr. Zhu Yufeng and a connected person of the Company under Chapter 14A of the Listing Rules; if implemented, the proposed acquisition will constitute a connected transaction and may also constitute a discloseable transaction under Chapter 14. The Company said it established a new-phase strategy in May 2026 to transform from a "mono-product champion in granular silicon" into a "global multi-product new energy materials platform", and in the first half of 2026 expanded into lithium iron phosphate cathode materials through its non-wholly-owned subsidiary Leshan Xinneng New Materials, which began shipments in June 2026 and has been profitable since commencing operations; the directors believe the acquisition will extend the Group into lithium iron phosphate cathode materials, reduce reliance on polysilicon and wafer price cycles, and leverage the target's R&D capability, production facilities and customer network to build new growth drivers.