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Urban Tea announces entry into definitive agreement to acquire two companies

Urban Tea

CHANGSHA, China – 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.”