Xiabuxiabu (00520) plans to acquire 40% of Xiabuxiabu (China) Food's shares for 89 million yuan

According to Zhitong Finance App, Xiabu Xiabu (00520) announced that on April 17, 2025, the company plans to acquire 40% of the shares in the target company (Xiabu Xiabu (China) Food Holdings Co., Ltd.) from Mr. He Guangqi (Chairman of the Board of Directors, Executive Director and Controlling Shareholder) at a cost of RMB 89 million.

The target company is a limited liability company incorporated in the Cayman Islands and an investment holding company. The target company is a joint venture established by the company and Mr. He Guangqi in 2016. As of the date of this announcement, its total issued share capital was US$1 million, of which US$600,000 was funded by the company and US$400,000 by Mr. He Guangqi.

As of the date of this announcement, the target company directly owns Xiabu (Hong Kong) Foods. Xiabu (Hong Kong) Foods is a company incorporated in Hong Kong, China, mainly engaged in investment holdings. Xiabu (Hong Kong) Foods has four wholly-owned limited liability subsidiaries in mainland China, namely: (i) Xiabu (China) Foods, which is mainly engaged in R&D, production and sales of condiments; (ii) Xiabuxiabu (Shanghai) Food Trading Co., Ltd.; (iv) Beijing Xiabuxiabu (Shanghai) Food Trading Co., Ltd., of which (ii) to (iv) are mainly engaged in food sales. In addition, it also holds 50% of the rights of Rijin Foods (Tianjin Co., Ltd.), a joint venture founded in China and mainly engaged in food sales benefit.

The company believes that since 100% of the target group's profit is included in the group's financial statements, the acquisition can add to the net profit due to the company's owners. The acquisition also represents the company's full confidence in the future of the target group's main condiment business, which is expected to generate long-term returns for shareholders.

Target Group provides a variety of condiment products, including soups, dips, sauces and various compound condiments, as well as gift packaging and limited edition products for high-end customers, and has established a nationwide distribution network in China. As of December 31, 2024, the distribution network covers 27 provinces, municipalities and autonomous regions of China, more than 400 supermarket chains and more than 10,000 traditional retail stores (including convenience stores, community stores and fresh food stores). Since the outbreak of COVID-19, prepackaged foods have been widely welcomed, especially among busy people who want to cook at home. Sales of hot pot condiments continue to grow, driven by the growing trend of consumers enjoying hot pot at home. Hot pot condiments provide a quick and easy option for people to enjoy home-cooked flavors. By increasing the shares of the target group, the Group is fully prepared to provide services to dine-in and takeout customer groups, thereby building a balanced and diversified business model in the catering industry.

After the transaction is completed, the target company will become a wholly-owned subsidiary of the company and will continue to be comprehensively included in the Group's financial results. The Group's condiments business division continued to be profitable during the three-year period ending December 31, 2024. Given that it is a non-wholly-owned subsidiary operating as the core operating of the Group's condiment business division, the target company has profitable performance. The acquisition is expected to enhance the Group's long-term financial performance and have a positive impact on the company's profit and financial performance after completing the transaction.