Aoxin Q & M Dental Group Limited: Proposed RMB376 Million Acquisition of Second Dental Group in China

Key Highlights for Investors

• Memorandum of Understanding (MOU) Signed: Aoxin Q & M Dental Group Limited (the “Company”) has entered into a non-binding MOU on 17 April 2026 to acquire a second dental group in China (“Second Chinese Dental Group”).
• Significant Expansion in China: This deal is separate from the previously announced March MOU and targets a different dental group, expanding Aoxin Q & M’s footprint in China’s southern region.
• Large, Established Target: The Second Chinese Dental Group operates nearly 15 dental clinics, supported by about 60 dentists, and offers a comprehensive range of dental services (implants, orthodontics, restorations, periodontal treatment). It has a strong track record and an established patient base.

Detailed Terms of the Proposed Acquisition

Transaction Structure and Consideration

• Total Purchase Price: RMB376 million (subject to financial due diligence adjustments).
• Payment Breakdown:
  • Cash Consideration: RMB188 million (50%), paid as follows:
    • RMB120 million on Completion.
    • RMB48 million in three tranches over three years (RMB8m, RMB20m, RMB20m), conditional on profit targets being met and verified by Group auditors.
    • RMB20 million held in escrow for 10 years, tied to profit guarantee obligations.
  • Non-Cash Consideration: RMB188 million (50%), satisfied by new share issuance:
    • RMB131.6 million (70%) in shares at S\$0.35 per share.
    • RMB56.4 million (30%) in shares at a price based on the 7-day volume-weighted average before completion.
    • All shares are subject to a 15-year moratorium.
• Profit Guarantee: Seller guarantees aggregate NPAT of RMB358.5 million over 10 years, with annual targets escalating from RMB20 million in year 1 up to RMB44 million in years 8-10.
• Escrow Mechanism: RMB20 million escrowed for 10 years to cover any profit shortfalls.
• Service and Share Pledge Agreements:
  • Seller to enter a 15-year service agreement with non-compete and non-solicit clauses.
  • Seller must pledge all consideration shares to the Company as security for the profit guarantee.

Strategic Rationale

• Strategic Expansion: The acquisition aligns with the Company’s and its parent (Q & M Dental Group (Singapore) Limited) strategy to use Aoxin Q & M as its China consolidation platform.
• Value Creation Opportunities: The target’s network provides a strategic base in southern China, with potential for further expansion and operational optimisation leveraging the Group’s expertise.
• Retention of Key Management: The seller brings proven operational expertise and will support the business for at least 15 years, ensuring continuity and leveraging local relationships.

Key Issues for Shareholders

• Non-Compete Undertaking: The Company had previously agreed not to operate outside the Northern PRC Region per its Non-Compete Undertaking with Q & M. Completion of this deal (and the March MOU deal) would breach this undertaking.
• Potential Lifting of Restriction: The Company is in discussions with Q & M to potentially lift this restriction. A resolution or inability to resolve this could have significant implications for future operations and expansion in China.
• Shareholder Dilution: Issuance of new shares as part of the purchase consideration will dilute existing shareholders, although these shares are subject to a 15-year lock-up.
• Transaction Uncertainty: The MOU is non-binding, subject to due diligence, final agreement, and regulatory approvals. There is no certainty the acquisition will complete.

Next Steps & Timeline

• Further Announcements: The Company will update shareholders on any material developments, including the signing of definitive agreements, financial effects, and compliance with SGX Catalist rules.
• Recommendation: Shareholders are advised to exercise caution in trading and to monitor further announcements closely.

Cautionary Statement

The Proposed Acquisition is at an early stage and may not proceed. Investors are advised to read this and future announcements carefully and consult their professional advisors in case of doubt.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. The information contained herein is based on publicly available announcements made by Aoxin Q & M Dental Group Limited as of 20 April 2026. The Singapore Exchange Securities Trading Limited has not reviewed or approved the contents of this article, and no responsibility is accepted for its accuracy or completeness. Investors should exercise due diligence and consult their own advisors before making any investment decisions.

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