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Sapporo Love Life's 528 Million Yuan Cash Acquisition Receives Inquiry Letter, Four Core Issues Pending Resolution

Can AI high-performance commitments help avoid past M&A risks?

Every Data Reporter: Wen Duo Every Data Editor: Huang Bowen

Due to a related-party acquisition with a premium of up to 24 times, Shapu Aisi (SH603168, stock price 7.8 yuan, market value 2.918 billion yuan) has received inquiries from regulators.

On the evening of March 17, Shapu Aisi announced that it had received an inquiry letter from the Shanghai Stock Exchange (hereinafter referred to as “SSE”). Earlier that day, the company disclosed plans to acquire 100% equity of Shanghai Qinli Industrial Co., Ltd. (hereinafter “Shanghai Qinli”) held by controlling shareholder Shanghai Yanghe Industrial Co., Ltd. (hereinafter “Yanghe Industrial”) and its concerted action partner Shanghai Yihe Medical Management Co., Ltd. (hereinafter "Yihe Medical) for 528 million yuan in cash.

Notably, the target asset Shanghai Qinli has a net asset book value of 20.9746 million yuan, but its valuation reached 528 million yuan, an appreciation rate of 2,417.87%.

In response, the SSE’s inquiry letter raised four major categories of questions, including the fairness of the transaction valuation, the achievability of high-performance commitments, the company’s payment capacity, and potential risks of the target assets.

Where does the 528 million yuan in cash come from? SSE focuses on acquisition payment ability

A cash transaction of up to 528 million yuan is undoubtedly a huge challenge for Shapu Aisi, which does not have abundant funds on hand.

According to the acquisition announcement, the transaction price is 528 million yuan, all payable in cash, with funding sourced from the company’s own funds and bank loans. However, a review of Shapu Aisi’s Q3 2025 report shows that as of the end of the reporting period, the company’s cash and cash equivalents were about 101 million yuan, and trading financial assets were about 122 million yuan, totaling approximately 223 million yuan—far less than the 528 million yuan total transaction price.

According to the transaction plan, the payment will be made in five installments, with the first two installments accounting for a combined 70%, approximately 370 million yuan, creating significant short-term payment pressure.

This situation has attracted regulatory attention. The SSE’s inquiry letter requests Shapu Aisi to explain the arrangement for raising funds and the company’s ability to fulfill the payment, considering current available funds, daily operating cash flow needs, bank credit limits, and the progress of merger and acquisition loan approvals.

Additionally, the SSE also asks the company to clarify how this large cash acquisition will impact the company’s liquidity, debt repayment ability, and normal operations in the future, and whether there is a risk of transaction failure due to insufficient funds.

Can high-performance commitments be fulfilled? Regulators closely monitor post-M&A risks

Besides the huge acquisition funds, the future profitability of the target company and the high-performance commitments have also become focal points of this transaction.

The key asset in this deal is Shanghai Tianlun Hospital Co., Ltd., a wholly owned subsidiary of Shanghai Qinli. Financial data shows that Shanghai Qinli is expected to achieve a net profit of 27.1396 million yuan in 2025.

Based on this, Yanghe Industrial and Yihe Medical made optimistic performance commitments: Shanghai Qinli’s net profit from 2026 to 2028 will be no less than 32.4 million, 37.3 million, and 42.65 million yuan respectively, with a total of no less than 112 million yuan over three years.

However, Shapu Aisi’s past M&A experiences cast doubt on the outlook of these high-performance commitments. The inquiry letter pointed out that the company’s previous acquisitions of controlling shareholder Taizhou Maternity Hospital and Qingdao Sight & Vision Eye Hospital both experienced performance declines after the performance commitment periods, leading to goodwill impairment risks.

Regulators therefore require Shapu Aisi to provide detailed explanations on the achievability of these performance commitments, and, based on previous “mistakes,” to describe specific measures the company will take to ensure Shanghai Qinli can continue stable operations after the commitment period, preventing the risk of “performance reversal.”

At the same time, the inquiry also raised concerns about Shanghai Qinli leasing property from the company’s actual controllers Lin Hongli, Lin Hongyuan’s father Lin Chuangang. The SSE requests Shapu Aisi to clarify whether there are leasing issues with the main operating premises, whether the lease contracts have been filed, whether the lessors hold complete property rights, and whether there are potential risks of hospital operation disruptions due to landlord debts or disputes.

Daily Economic News