Yashili : Announcements and Notices - Memorandum of understanding in Respect of the Proposed Disposal

43154-01A 1..5

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Yashili International Holdings Ltd

雅 士 利 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1230)

MEMORANDUM OF UNDERSTANDING

IN RESPECT OF THE PROPOSED DISPOSAL

This announcement is made pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance.

The Board is pleased to announce that on 23 January 2016, the Vendor, an indirect wholly-owned subsidiary of the Company, entered into the MOU with the Purchaser to sell the entire equity

interests in the Target Company, being 施恩(中國)嬰幼兒營養品有限公司 (Scient (China) Baby

Nourishment Co., Ltd.*). Under the Proposed Disposal, the Purchaser intends to acquire the entire equity interests in the Target Company and the Parties shall agree on the arrangement in respect of the debts and liabilities of the Target Company.

Within five (5) business days after the signing of the MOU, the Purchaser is obliged to pay the Vendor the Earnest Money in the sum of RMB10.0 million.

The shareholders of the Company and/or potential investors should note that the Proposed Disposal may or may not materialize. The Proposed Disposal, if materializes, may or may not constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules. Further announcement(s) will be made by the Company in accordance with the Listing Rules as and when appropriate. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the securities of the Company.

This announcement is made by the Board pursuant to Rule 13.09 of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

THE MOU

The Board is pleased to announce that on 23 January 2016, the Vendor, an indirect wholly-owned subsidiary of the Company, entered into the MOU with the Purchaser to sell the Sale Interests to the Purchaser. Under the Proposed Disposal, the Purchaser intends to acquire the entire equity interests in the Target Company and the Parties shall agree on the arrangement in respect of the debts and liabilities of the Target Company. Salient terms of the MOU are set out below.

Date : 23 January 2016

Vendor : Scient International Group Limited

Purchaser : Ausnutria Dairy (China) Co., Ltd.

Subject-matter : the Sale Interests, being the entire equity interests in the Target Company

(in particular, apart from the two trademarks of the ''Qin'' series, all other trademarks and the brand name of the Target Company shall not be included in the Proposed Disposal)

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, each of the Purchaser and its ultimate beneficial owner(s) is an independent third party.

Consideration

The total consideration for the Sale Interests will be negotiated between the Parties based on the appraised value of the Sale Interests to be determined by an independent Hong Kong qualified appraisal company. Under the MOU, the Parties agreed to procure a valuation report to be produced before 15 February 2016.

Earnest Money

Pursuant to the MOU, the Purchaser will pay the Vendor a sum of RMB10.0 million (the ''Earnest Money'') within five (5) business days after the date of the MOU. In the event that the Formal Agreement is entered into, the Earnest Money is agreed to be utilized as part of the consideration for the Proposed Disposal under the Formal Agreement.

Upon the signing of the MOU, the Vendor will procure the Target Company to cooperate with the Purchaser to seek the pre-approvals for the change of the name of the Target Company. If the Formal Agreement is not entered into prior to 29 February 2016 (but subject to the Parties agreeing to a later date) but the Vendor so performed before then, the Vendor is entitled to retain RMB1.0 million of the Earnest Money but must, within five (5) business days after the termination of the MOU, refund the remaining RMB9.0 million of the Earnest Money to the Purchaser.

Pilot-run production

During the period between the date of the MOU and the date of the Formal Agreement, the Target Company shall participate in a one-week pilot-run production upon the request of the Purchaser. The costs of raw materials and expenses in related to the pilot-run production shall be borne by the Purchaser.

Exclusivity

Unless agreed by the other Party in writing, prior to 29 February 2016, no Party shall approach or negotiate with any third party (that is unrelated to any of the Parties) regarding any transaction relating to the Sale Interests.

Termination

The MOU is intended to set out the Parties' intention with respect to the Proposed Disposal and the basis to initiate the due diligence process. The MOU is legally binding on the Parties but it is not intended to create any firm obligation on the Parties with respect to the Proposed Disposal, which is subject to further negotiation.

The Parties intend to enter into the Formal Agreement before 29 February 2016, but such date may be deferred if the production of the valuation report is delayed. In the event that no Formal Agreement is entered into before 29 February 2016 (or such later date as agreed), the Vendor has the right to terminate the MOU.

REASONS FOR THE PROPOSED DISPOSAL, INFORMATION ABOUT THE TARGET COMPANY AND THE PURCHASER

The Company is of the view that the Proposed Disposal is pursued in view of the key strategic deployment of the Group in the next five years, with an aim to provide a highly efficient and modern production layout through attaining an optimized and reasonable production capacity.

The Target Company is a company incorporated in the PRC with limited liability and is principally engaged in the production and sale of paediatric milk formula products.

The Purchaser is a company incorporated in the PRC with limited liability and is principally engaged in the production, marketing and distribution of imported paediatric cow milk formula in the PRC. As at the date of this announcement, it is a wholly-owned subsidiary of Ausnutria Dairy Corporation Ltd (stock code: 1717), a company listed on the Main Board of the Stock Exchange.

GENERAL

The shareholders of the Company and/or potential investors should note that the Proposed Disposal may or may not materialize. The Proposed Disposal, if materializes, may or may not constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.

Further announcement(s) will be made by the Company in accordance with the Listing Rules as and when appropriate. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the securities of the Company.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

''Board'' the board of Directors

''Company'' Yashili International Holdings Ltd, a company incorporated in the

Cayman Islands with limited liability with its shares listed on the Main Board of the Stock Exchange (stock code: 1230)

''connected person(s)'' has the meaning ascribed to it by the Listing Rules

''Director(s)'' the directors of the Company

''Earnest Money'' has the meaning ascribed to such term in the section headed ''THE

MOU - Earnest Money'' in this announcement

''Formal Agreement'' the formal sale and purchase agreement proposed to be entered into in

relation to the Proposed Disposal

''Group'' the Company and its subsidiaries

''Hong Kong'' Hong Kong Special Administrative Region of the People's Republic of

China

''independent third party'' any person(s) or company(ies) and its/their respective ultimate

beneficial owner(s) whom, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, are parties independent of the Company and connected persons of the Company in accordance with the Listing Rules

''Listing Rules'' the Rules Governing the Listing of Securities on The Stock Exchange

of Hong Kong Limited

''MOU'' the memorandum of understanding entered into between the Vendor and the Purchaser in relation to the Proposed Disposal

''Parties'' the Purchaser and the Vendor, being the parties to the MOU