MicroPort Scientific : Major Transaction-Acquisition of the CRM Business from LIVANOVA PLC

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This Announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities.

(Incorporated in the Cayman Islands with limited liability)

The Board is pleased to announce that on 20 November 2017 (after trading hours), the Company (as the guarantor), the Purchaser (a wholly-owned subsidiary of the Company) and the Seller entered into a legally binding Letter of Intent, pursuant to which the parties have agreed to enter into the Stock and Asset Purchase Agreement upon clearance of the Works Council Process in France.

Pursuant to the Stock and Asset Purchase Agreement, the Purchaser has conditionally agreed to acquire, and the Seller has conditionally agreed to sell, the CRM Business for an initial consideration of US$190 million (equivalent to approximately HK$1.5 billion), subject to working capital and other customary adjustments. For the financial year ended 31 December 2016, the CRM Business had revenue of approximately US$245.9 million (equivalent to approximately HK$1.9 billion) based on the unaudited management accounts of the CRM Business prepared in accordance with the US GAAP.

As one or more applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Acquisition is more than 25% but less than 75%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, and is therefore subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the date of this announcement, none of the Shareholders and/or their associate(s) has a material interest in the Acquisition and the transaction contemplated thereunder and hence, none of the Shareholders is required to abstain from voting for approving the Acquisition, the Letter of Intent, the Stock and Asset Purchase Agreement and the transactions contemplated thereunder.

A circular containing, among other things, (i) further information on the Acquisition; (ii) the accountants' reports on the CRM Business; (iii) the unaudited pro forma financial information of the Enlarged Group; and (iv) notice of the General Meeting and a form of proxy, is expected to be despatched to the Shareholders on or before 31 March 2018, as additional time is required for the preparation of the financial and other information on the CRM Business and the Enlarged Group.

1. BACKGROUND

   The Board is pleased to announce that on 20 November 2017 (after trading hours), the Company (as the guarantor), the Purchaser (a wholly-owned subsidiary of the Company) and the Seller entered into a legally binding Letter of Intent, pursuant to which the parties have agreed to enter into the Stock and Asset Purchase Agreement upon clearance of the Works Council Process in France.

   Pursuant to the Stock and Asset Purchase Agreement, the Purchaser has conditionally agreed to acquire, and the Seller has conditionally agreed to sell, the CRM Business for an initial consideration of US$190 million (equivalent to approximately HK$1.5 billion), subject to Adjustment.

2. INFORMATION OF THE PARTIES INVOLVED The Group

   The Group is a leading medical device company, focused on innovating, manufacturing and marketing high-quality and high-end medical devices globally. Its portfolio of products covers a wide spectrum of therapeutic markets such as cardiovascular, endovascular, neurovascular, electrophysiology, orthopedic, surgical management, diabetes care and endocrinal management.

   The Company

   The Company is incorporated in the Cayman Islands with limited liability and the shares of which have been listed on the Stock Exchange since 2010.

   The Purchaser

   The Purchaser is incorporated in the Netherlands with limited liability, and is an investment holding company. It is a wholly-owned subsidiary of the Company.

   The Seller

   LivaNova PLC is incorporated in the U.K. and listed on the Nasdaq Global Select Market (symbol: LIVN). LivaNova PLC is a global medical technology company built on nearly five decades of experience with a relentless commitment to improve the lives of patients around the world. Its advanced technologies and breakthrough treatments provide meaningful solutions for the benefit of patients, healthcare professionals and healthcare systems. Headquartered in London, U.K. and with a presence in more than 100 countries worldwide, LivaNova PLC operates as three business franchises: cardiac surgery, neuromodulation and CRM, with operating headquarters in Mirandola (Italy), Houston (U.S.) and Clamart (France), respectively.

   As at the date of this announcement, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiry, the Seller and its ultimate beneficial owner(s) are third parties independent of the Company and are not connected persons of the Company.

3. INFORMATION ON THE CRM BUSINESS

The CRM Business has a global presence and consists of the development, design, manufacture, marketing, promotion, sale, distribution, implementation and support of devices that monitor patient cardiac information in order to both (i) identify abnormal heart conditions such as arrhythmias and ventricular fibrillation and (ii) apply electrical current to prevent or treat such abnormal conditions ("CRM Devices"). The principal products include (i) CRM Devices, (ii) ancillary devices such as programmers, external monitors, and other systems, in each case, that link to a CRM Device in order to obtain and communicate diagnostic and patient status information, (iii) cardiac leads, pads, and other components, in each case, that are implanted with an implantable CRM Device, or that are used in connection with affixing or implanting a CRM Device in or on a patient, (iv) algorithms and components such as ASICs boards, and software that implement the detection and correction algorithms in a CRM Device and (v) networks and systems used in patient interactions with physicians and emergency responders in connection with a CRM Device.

Based on the unaudited management accounts of the CRM Business prepared in accordance with the US GAAP (which has not been reviewed or audited by the Company's auditors), the assets value of the CRM Business as at 30 June 2017 was approximately US$345.0 million (equivalent to approximately HK$2.7 billion), the revenue for the financial year ended 31 December 2016 was approximately US$245.9 million (equivalent to approximately HK$1.9 billion), the net loss before taxation attributable to the CRM Business for the financial year ended 31 December 2016 was approximately US$68.8 million (equivalent to approximately HK$536.6 million), and the adjusted net loss before extraordinary items and taxation was approximately US$2.8 million (equivalent to approximately HK$21.8 million) for the financial year ended 31 December 2016. Set out below is the breakdown of the adjusted net loss before extraordinary items and taxation for the financial year ended 31 December 2016:

Note 1: related to the 2016 research & development restructuring plan with 64 employees as at 30 June 2017.

Note 2: PPA adjustments and inventory step-up are related to the Merger and will not have any impact on the CRM Business post-Closing.

Note 3: cost of employee retention compensation plan.

Note 4: integration costs in relation to the Merger.

PPA adjustment and inventory set-up as shown in the above breakdown relates to the accounting adjustments arising as a result of the Merger between Cyberonics, Inc. and Sorin S.p.A. As a result of the Merger, the Seller became the holding company of the combined businesses of Cyberonics, Inc. and Sorin S.p.A. The Company believes that such items will not have any impact on the CRM Business post-Closing and as such, the adjusted net loss before extraordinary items and taxation better reflects the profit and loss position of the CRM Business for the financial year ended 31 December 2016.