Urban Tea Announces Entry into Definitive Agreement to Acquire Two Companies

Rhea-AI Summary

Urban Tea Inc. (NASDAQ: MYT) has announced an acquisition agreement to obtain a 51% stake in two Chinese entities: Chuangyeying Brand Management Co., Ltd. (CYY) and Store Master Food Trading Co., Ltd. The deal, valued at approximately RMB 3.1 million ($468,000), aims to enhance Urban Tea's franchise operations and supply chain efficiency. CYY manages 302 tea beverage franchisees, while Store Master specializes in supply chain management. This acquisition is expected to drive franchise growth and shareholder value.

Positive

• Acquisition of 51% in CYY and Store Master may enhance franchise operations.
• CYY's management of 302 franchisees could significantly expand Urban Tea's market presence.
• Store Master's expertise in supply chain management is expected to improve operational efficiency.
• Growth in franchisee network anticipated, potentially increasing revenue.

Negative

• None.

CHANGSHA, China, Nov. 17, 2020 /PRNewswire/ -- Urban Tea Inc. (the "Company," "we" or "Urban Tea") (NASDAQ: MYT), a premier retailer of specialty teas and baked goods based in Hunan, China, announced today that its wholly-owned subsidiary Hunan Ming Yun Tang Brand Management Co., Ltd. ("Ming Yun Tang") has entered into an acquisition agreement (the "Agreement") to acquire 51% equity interests of two Chinese entities : Chuangyeying Brand Management Co., Ltd. ("CYY") and Store Master Food Trading Co., Ltd. ("Store Master").

CYY owns a franchise permit to operate franchise stores in China and also holds multiple registered trademarks in China. An impressive 302 tea beverages franchisees fall under its management. Store Master specializes in supply chain management, product research and development, and optimizing long-term and stable supply chains. Additionally, Store Master owns a scalable warehouse with an advanced logistics management system and supplies raw material to its managing franchisees.

Under the terms of the Agreement, Urban Tea will acquire 51% of CYY and Store Master for cash contribution of approximately RMB 3.1 million (approximately $468,000). Ming Yun Tang agreed to contribute additional cash based on CYY and Store Master's achievement of certain revenue, net income and number of new stores in the next three years. Both companies' executive teams have years of extensive experience in supply chain and franchise management. Their expertise will be a valuable asset to Ming Yun Tang's domestic business. Our collaborations will play a critical role by improving the supply chain and product R&D, as well as driving rapid growth of franchisee network and sales. CYY and Store Master will receive additional rewards according to certain earn-out schedules based on their business performance and other financial indicators.

Urban Tea Chief Executive Officer Mr. Yi Long commented, "The acquisition is a major milestone for Urban Tea. We now operate franchise stores in 28 different provinces and municipalities, taking us to the next level in competition and challenges. With a rebranded business strategy, we are confident that the acquisition will help us grow our platform, enhance our supply chain, and provide truly diversified products and services to our clients. Meanwhile, we expect our footprint in the overseas market will continue to grow. With the combination of CYY's and Store Master's advanced supply chain technology, their team's operational skills, and our integrated resources, we believe we will achieve long-term growth by attracting more franchisee opportunities and providing customers with the best-in-store products and services. Most importantly, this growth is expected to maximize our shareholders' value as well."

About Urban Tea, Inc. 

Urban Tea, Inc. is an emerging specialty tea product distributer and retailer headquartered in Changsha City, Hunan Province, China. Through its wholly owned subsidiary, Mingyuntang (Shanghai) Tea Limited which controls Hunan Ming Yun Tang Brand Management Co., Ltd. and Hunan 39 Pu Tea Co., Ltd., the Company currently market a wide range of trendy tea drinks, light meals, and pastries targeting China's new urban generation in Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via our own stores. For more information, please visit: http://ir.h-n-myt.com/investor.

Forward-Looking Statements

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

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SOURCE Urban Tea Inc.

FAQ

What acquisition did Urban Tea announce?

Urban Tea announced the acquisition of 51% equity interests in CYY and Store Master.

How much is Urban Tea paying for the acquisition?

Urban Tea is paying approximately RMB 3.1 million ($468,000) for the acquisition.

What does CYY do for Urban Tea?

CYY owns a franchise permit and manages 302 tea beverage franchisees in China.

What is the role of Store Master in the acquisition?

Store Master specializes in supply chain management and product research and development.

How will the acquisition impact Urban Tea's business?

The acquisition is expected to drive franchise growth, enhance supply chain efficiency, and increase shareholder value.