Tontine Wines Proposes to Acquire Interests in Beijing Wangjiu,under Leshi, To Engage in Vertically Integrated Marketing Platform
Aug 23, 2017

China Tontine Wines Group Limited (the "Company", stock code: 0389, together with its subsidiaries, the "Group"), one of the leading sweet wine producers in China, entered into a memorandum of understanding ("MOU") with potential vendors for eventual possible acquisition of 25.53 per cent equity interests in Beijing Wangjiu Electronic Commerce Co., Ltd. ("Beijing Wangjiu"), being a mature integrated marketing platform with 5 million online consumers and 3,000 core collaborators as well as a comprehensive layout of retail network.

The Company announced that Tonghua Tongtian Winery Co., Ltd., a wholly-owned subsidiary of the Company, entered on 21 August 2017, into a MOU with certain parties ("potential vendors") for the possible acquisition by it (or the Company's subsidiary or affiliated company) of certain equity interests and/or investment (the "Proposed Transaction") in Beijing Wangjiu at a consideration to be mutually agreed. The consummation of the Proposed Transaction may result in the Group acquiring approximately 25.53 per cent equity interests in Beijing Wangjiu.

Mr. Wang Guangyuan, the Chairman of Tontine Wines, noted, "The Proposed Transaction, if materialized, would expand the wine purchase platform of the Group established exclusively for high to middle-end consumers, create a huge industrial value by further capital integration and establish an eco-business model of wine which is unique in the industry. Different from the prior single-trade relationships and merger and acquisition relationships with the upstream enterprises in the wine industry, the Proposed Transaction is an in-depth cooperation reached between the Group and Beijing Wangjiu in respect of capital and business. The unique eco-business model of Beijing Wangjiu and its superiority in biological resources will create a brand-new business value in multiple aspects together with the Group's whole-industrial-chain model upstream."

The Company currently intends to finance the Proposed Transaction, if materialized, partly by its internal resources and partly by capital market financing.

If the Proposed Transaction is materialized and consummated pursuant to the formal agreement, the Group may at liberty to make further investment in Beijing Wangjiu by way of additional capital contribution, assets injection or other means so as to further bring up its equity interests, and acquire a controlling stake, in Beijing Wangjiu.

The Group expects that once the Proposed Transaction is executed, other than capital cooperation, both parties will, in the future, carry out a full-dimensional business cooperation to create the greatest eco-system in the wine industry in the PRC based on the extensive layout of the supply chain production and the diversified industrial chain upstream by leveraging Beijing Wangjiu's B2C (business to consumer), B2B (business to business) and O2O (online to offline) distribution channel network throughout the nation and the marketing capability of its brand.

The Group also plans to integrate the sales and distribution channels of the two enterprises so as to expand the sales and distribution network of the Group and effectively reduce marketing and promotion expenses which, in turn, are expected to enhance the Group's profitability in the long run. Each of the above factors is expected to bring synergy effect and realize mutual benefits and complementation with shared resources, which will provide incentives for long-term collaboration. A win-win situation for the Group and Beijing Wangjiu will be ultimately achieved, which is critical to the future development of the Group.

About China Tontine Wines Group Limited

China Tontine Wines Group Limited is one of the leading sweet wine producers in China. Unique taste, premium quality and top-notch operation earn the Group numerous awards. For instance, the Group's "Xuanniya Ice White Grape Wine" won the gold medal again in the "Grape Wine Quality Competition in International Leading Wine Regions"; the Group won the "Second Prize of the Innovative Achievements of the 23rd National Enterprise Management Modernization" and was ranked among "Top 100 Chinese Wine Manufacturers 2016".

The exceptional quality of Tontine Wines' products is much attributable to the Group's commitment to quality assurance and its grape supply from Ji'an city in Jilin Province, one of the few regions in the world that can cultivate the unique mountain grapes. In recent years, the Group has been dedicated to diversify its product portfolio to include low to mid-end wines to tap the mass market. The Group currently offers 137 types of wine products sold through 129 distributors in 21 provinces, 3 autonomous regions and 4 municipal cities in China. The Company's shares were listed on the Main Board of the Stock Exchange of Hong Kong Limited since November 2009.

About Beijing Wangjiu Electronic Commerce Co., Ltd

Beijing Wangjiu is an e-commerce website positioning in the high-end wine consumption sector in the PRC. It upholds the mission of offering high-end wine with professional and all-round services to the high consumption groups in the PRC. It is established as the first-ever vertically integrated professional platform of wine in the PRC by means of video digital multimedia and mobile internet.

Along with the progressively mature marketing platforms which have 5 million online consumers and 3,000 core collaborators and under the comprehensive layout of retail outlet system, Beijing Wangjiu has, through years of efforts, accumulated abundant operating resources and developed mature operating capability.

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Issued by: China Tontine Wines Group Limited
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