On the morning of April 10, 2025, European time, Wanhua Chemical successfully acquired the specialty isocyanate business of Vencorex (hereinafter referred to as Vencorex), a French company. Vencorex is a giant in the HDI (Hexamethylene Diisocyanate) industry, with a production capacity of 70,000 tons of HDI monomer in France. The acquisition includes the production base located near Grenoble, France. This acquisition is not only a crucial step in Wanhua¡¯s strategic layout in the European market but also a significant milestone in our efforts to optimize asset allocation and expand our business footprint globally. It demonstrates Wanhua¡¯s strategic vision and capability for global deployment as a leading enterprise in the industry, and lays a solid foundation for our continuous leadership in the industry in the future.

Vencorex is a global leader in the production of aliphatic isocyanates and their derivatives, with production bases in France, the United States, and Thailand. Following the Russia-Ukraine war and the subsequent European energy crisis, Vencorex¡¯s competitiveness in the fierce market competition declined, and its operating conditions continued to deteriorate, eventually leading to the company entering a stage of judicial reorganization.

The HDI adduct unit that Wanhua acquired is one of the core assets of Vencorex¡¯s French factory. This unit is mainly used for the production of HDI derivatives. Through the acquisition, Wanhua not only obtained the production facilities but also inherited Vencorex¡¯s sales channels and brand in the European market, further consolidating our leading position in the specialty isocyanate industry.

1. Reshape the Market Landscape and Enhance Global Competitiveness

As a mainstream supplier of aliphatic isocyanates in the European region, Vencorex has extensive technical expertise and a wide range of market channels within the industry. Through the acquisition, we will strategically integrate Vencorex's high-quality assets, deeply integrate into the European market, and enhance Wanhua's market share in Europe and globally. While optimizing the allocation of global resources, we will achieve in-depth synergy along the industrial chain, effectively reduce market competition, and increase industry concentration.

2. Optimize Production and Warehousing to Empower Global Operational Efficiency

In this acquisition, Wanhua not only obtained Vencorex's production base in Western Europe but also integrated its advanced warehousing facilities, thereby achieving efficient synergy between production and warehousing. This will enable Wanhua to quickly respond to the demands of the European market, reducing European inventory turnover time to one month and significantly enhancing the flexibility and responsiveness of the supply chain.

Moreover, the base can also serve as a warehousing and logistics center, leveraging its advantageous geographical location and efficient logistics network to further optimize the logistics and distribution system, reduce warehousing and logistics costs, and improve operational efficiency.

3. Strengthen Core Barriers and Enhance Global Negotiation Advantages

This acquisition also includes the purchase of Vencorex's intellectual property (IP). By acquiring the IP, we have not only successfully prevented the uncontrolled diffusion of various isocyanate core technologies but also further consolidated our technological barriers. This adds significant leverage for Wanhua in future international negotiations and achieves a dual-brand synergy. This synergy will enhance brand attractiveness and generate greater value through the sharing of advantageous brand resources and joint branding efforts.

4. Mitigate Macro-Level Uncontrollable Risks and Provide Security for Global Layout

Currently, the global economic landscape is complex and volatile. Faced with the high tariff policies of the United States against China, our early deployment of production capacity in Europe can effectively mitigate macro-level uncontrollable risks. It provides low-tariff products for stable U.S. business operations, reducing the erosion of profits by tariff policies. This supports the continuous expansion of Wanhua's market in the United States and provides a solid guarantee for the stable development of global business. Additionally, this acquisition offers a "pill of reassurance" to international major clients. The stable and reliable supply from overseas bases enhances their trust and confidence in Wanhua, providing a solid foundation for stable cooperation and future growth.