JIA YAO HLDGS (01626) plans to issue 20.5 million consideration shares at a discount of approximately 17.90% to acquire 80% of Ninety Investment Holding Limited.

JIA YAO HLDGS (01626) announced that on August 12, 2026, the company (as the buyer), the seller Ninety Kilometers Holding Limited, and the guarantor entered into a sales agreement, whereby the company conditionally agreed to acquire, and the seller conditionally agreed to sell, shares for sale equivalent to 80% of the total issued shares of the target company, Ninety Investment Holding Limited, for a maximum consideration of HKD 430.5 million, which will be paid by the company through the issuance of consideration shares at an issue price of HKD 21.00 per share to the seller under its general mandate (accounted for as fully paid). Upon completion, the target company will become a subsidiary of the company, and the financial performance of the target group will be consolidated into the performance of the group. The target group is mainly engaged in the development and distribution of AI-driven internet games, as well as the development, consulting, and provision of services related to enterprise-level AI application technologies. The maximum number of consideration shares to be issued is 20.5 million shares, accounting for (i) approximately 3.42% of the company's existing issued share capital as of the date of this announcement; and (ii) approximately 3.30% of the issued share capital of the company after the issuance of consideration shares (assuming no other changes to the company's issued share capital from the date of this announcement until completion). The number of consideration shares to be issued to the seller will be subject to the profit guarantee arrangement. The issue price of HKD 21.00 per consideration share represents a discount of approximately 17.90% to the closing price of HKD 25.58 per share reported on the Stock Exchange on the date of the sales agreement; a discount of approximately 18.60% to the average closing price of HKD 25.80 per share reported on the Stock Exchange for the last five (5) consecutive trading days immediately preceding the date of the sales agreement; and a discount of approximately 14.89% to the average closing price of HKD 24.674 per share reported on the Stock Exchange for the last ten (10) consecutive trading days immediately preceding the date of the sales agreement. The group is primarily engaged in the design, production, and sale of electronic cigarettes and related products, as well as providing supporting services for electronic cigarettes. With the rapid development of artificial intelligence technology, the world is ushering in a new wave of technological revolution. Management believes that the current cycle of innovation in artificial intelligence technology is still in its early stages, especially in the application layer of the AI industry value chain, which contains enormous market potential. The acquisition aligns with the company's long-term business strategy of diversifying its business portfolio beyond the electronic cigarette business and strengthening the company's presence in the rapidly developing AI-related industry. The target group's main business focuses on AI-driven game development and distribution, while also providing AI application solutions to enterprises. The acquisition is a strategically significant initiative that aids the company in diversifying its revenue sources and expanding into the rapidly growing field of AI applications, thus better promoting sustainable growth and creating long-term value for shareholders. The Board also believes that the acquisition will create significant strategic value for the group, including the following aspects: (i) Seizing opportunities in the AI market and acquiring talent: This will enable the group to strategically expand into the AI application industry while bringing in a team of professionals with extensive experience in internet and AI, providing support for the groups long-term development. (ii) Enhancing AI capabilities and development efficiency: After the acquisition, the target group will continue to leverage its existing AI automation production execution capabilities (art, code, and testing), deepening the breadth and depth of AI application across all stages of game development, while gradually extending AI capabilities from production execution to design assistance and planning decision-making. At the same time, the target group will advance its phased development roadmap, moving from a short-term human-machine collaborative design model to a medium- to long-term end-to-end AI Agent platform with autonomous decision-making capabilities. (iii) Improving cost efficiency and commercial success: After the acquisition, the target group will significantly reduce the development cycle and production costs of AI-driven internet games while systematically enhancing the commercial success rate of game products through data-driven decision-making mechanisms, thereby establishing sustainable competitive advantages. The consideration will be paid after completion through the issuance of consideration shares, which will result in an approximately 3.30% dilution effect on the equity of existing shareholders. Despite the dilution effect, since the consideration will be fully paid in the form of consideration shares, the group will not experience any cash outflow after completion, thereby alleviating the financial pressure on the company. Furthermore, the dilution effect is offset by the advantages of the acquisition mentioned above.