SouFun Holdings (SFUN) Updates on Wanli Stake Acquisition; Subscription Agreements Entered

SouFun Holdings Limited (NYSE: SFUN) announced that it had made significant progress on its acquisition of a controlling stake in Chongqing Wanli New Energy Co., Ltd. ("Wanli"), a company listed on the Shanghai Stock Exchange (stock code: 600847), and the sale of Wanli's assets (such transactions, collectively, the "Restructuring"), as referred to in a press release dated November 13, 2015. The parties involved have entered into definitive agreements with regard to the Restructuring. Specifically, the Company's wholly-owned subsidiaries, Beijing SouFun Fang Tian Xia Network Technology Co., Ltd. ("SouFun Network"), Beijing Fang Tian Xia Network Technology Co., Ltd. ("Fang Tian Xia Network") and Beijing SouFun Decorative Engineering Co., Ltd. (together with SouFun Network and Fang Tian Xia Network, collectively, the "Fang Subsidiaries"), have entered into a share subscription and asset purchase agreement (the "Share Subscription Agreement") with Wanli and Mr. Xicheng Liu, the ultimate controlling shareholder of Wanli, and a profit compensation agreement (the "Compensation Agreement") with Wanli.

Share Subscription and Asset Sale

Under the Share Subscription Agreement, the Company has agreed to subscribe through each of the Fang Subsidiaries for new shares of Wanli (the "Subscription Shares") at a price of RMB23.87 per share, equal to 90% of the average trading price of Wanli's shares in the 20 trading days immediately before the public announcement of the resolutions of Wanli's board of directors approving the transactions contemplated by the Restructuring. In exchange of the Subscription Shares, the Company has agreed to transfer through the Fang Subsidiaries to Wanli the entire equity interests in five wholly-owned subsidiaries of the Fang Subsidiaries (collectively, the "Fang Assets") that operate as the Company's service platforms for online media business, Internet financial services, and big data business([i]). The Subscription Shares will be calculated based on a final valuation of the Fang Assets by an independent asset appraisal company. The current preliminary valuation of the Fang Assets is RMB16.18 billion.

Wanli has also entered into an asset sale agreement (the "Asset Sale Agreement") with Shenzhen Nan Fang Tong Zheng Investment Co., Ltd. (the "Asset Sale Buyer"), the controlling shareholder of Wanli, and Mr. Xicheng Liu, pursuant to which Wanli has agreed to sell all of its existing non-cash assets and liabilities to the Asset Sale Buyer and maintain at least RMB0.7 billion cash in Wanli.

The consummation of the transactions contemplated under each of the Share Subscription Agreement and the Asset Sale Agreement is interdependent and conditioned upon the consummation of the transactions contemplated under each other agreement.

Following the consummation of the foregoing transactions, the Fang Subsidiaries will collectively hold approximately 70.01% of the share capital of Wanli, taking into account the Concurrent Share Placement (as defined below). The Company will consolidate Wanli's operating results as Wanli will become a majority-owned indirect subsidiary of the Company. The Subscription Shares will be subject to a 36-month lock-up.

Profit Compensation

As required by the PRC regulatory authorities, under the Compensation Agreement, in the event that the consolidated net profits attributable to shareholders (excluding extraordinary items) of the Fang Assets in any of the fiscal years of 2016, 2017 and 2018 (collectively, the "Covered Period") are less than the profit target for the respective fiscal year of RMB800 million, RMB1,040 million and RMB1,352 million, or there is any impairment loss at the end of the Covered Period, each of the Fang Subsidiaries will be jointly and severally liable to compensate Wanli for the shortfall of the profit target or the impairment loss by transferring such number of the Subscription Shares to Wanli for a nominal price as calculated based on a pre-determined formula, subject to a cap equal to the total number of the Subscription Shares.

Concurrent Share Placement

To support the future business growth following the Restructuring, Wanli has concurrently entered into share subscription agreements with certain investors([ii]), including reputable institutional investors (collectively, the "Share Placement Investors"), pursuant to which Wanli has agreed to issue to the Share Placement Investors new shares of Wanli at a price of RMB23.87 per share for a total consideration of up to RMB3.16 billion (such transactions, the "Concurrent Share Placement"), which is subject to the final valuation of the Fang Assets. The shares issued under the Concurrent Share Placement will also be subject to a 36-month lock-up.

Mr. Vincent Mo, the Company's Chairman and CEO, comments: "We are thrilled to achieve this solid progress by entering into the definitive agreement with Wanli. The access to the China domestic capital market will not only facilitate our operations in China but also bring in the real value to our shareholders. We are expecting this restructuring to be closed in the near future and provide strong support to our fast growing e-commerce, financial services and online media business. Fang is aggressively transforming from the leading real estate media platform into a transaction oriented platform. The Wanli deal is definitely a very key step for us at this pivotal point".

The consummation of the Restructuring remains subject to the requisite internal approvals of the relevant parties and regulatory clearance, including that by the China Securities Regulatory Commission and other applicable regulatory authorities. There is no assurance that these approvals or regulatory clearance will be obtained within an expected time frame, or at all.

For further details of the transactions contemplated under the Restructuring and the Concurrent Share Placement, please refer to public announcements made by Wanli, which are available at www.sse.com.cn, the official website of the Shanghai Stock Exchange.

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