On August 2, 2019, Xinsheng Group and VV Group Co. Ltd. (hereinafter referred to as VV Group) signed the Equity Transfer Agreement, in which 284 million shares of VV Food & Beverage Co., Ltd. (hereinafter referred to as VV) are sold for RMB 955 million.
When the deal is executed, Xinsheng Group will become the No.1 shareholder of VV with a 17% stake.
On September 18th, all affairs related to the equity transfer were completed; on October 8th, Xinsheng Group nominated 2 directors to join VV's board of directors.
The State-owned Assets Supervision and Administration Commission of Xuzhou Municipal People's Government held a press conference right now, giving a detailed introduction to Xinsheng Group's acquisition of VV.
Xinsheng Group
Xinsheng Group, founded in 2007, with a registered capital of RMB 4 billion, is a large-scale state-owned enterprise in Xuzhou.
In 2018, Xinsheng began its re-structuring and integration, and founded the Xinsheng Investment Holding Group Co., Ltd. with three core businesses including city construction, city service, and city industries.
VV
VV, founded in 1994, with a registered capital of RMB 1.672 billion, is a private company specializing in food and beverage businesses.
The company went listed in the Shanghai Stock Exchange in 2000 (stock code: 600300, stock name in short: VV).
The company specializes in the production and sales of soybean milk powder, vegetable protein drinks (soybean milk), dairy products, liquor, tea, as well as grain procurement, storage and processing, with main products including VV soybean milk powder, VV plant-based protein drink (soybean milk), VV Liuchaosong flour, Tian Shan Xue dairy products, Zhi Jiang liquor and Yi Qing Yuan tea, in all product series.
The company has a total asset of RMB 8 billion, net asset about RMB 3 billion, and an annual operating revenue about RMB 5 billion.
What are the thoughts of Xinsheng Group behind its acquisition of VV?
What's Xinsheng's development plan for VV after the acquisition?
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What are the thoughts of Xinsheng Group behind its acquisition of VV?
Firstly, the acquisition is in line with policy directions and requirements.
The State-owned Assets Supervision and Administration Commission of the State Council pointed out in November 2018, that the mixed ownership reform itself should be bi-directional, non-public capital are encouraged to engage in the state-owned enterprises (SOE) reform, and SOE are encouraged to help non-public enterprises.
Meanwhile, policy documents related to grain from the state, province, and cities are all encourage SOE to take a bigger role in the development of the grain industry.
Secondly, the acquisition is in accordance with the overall development plan of Xuzhou city.
Xinsheng Group is the capital platform with the largest state-owned assets in the city, therefore, it is the main practicing entity for Xuzhou's overall development policies. Agriculture and grain are always Xuzhou's pillar industries, so developing toward a stronger and bigger grain industry is an important part of the overall development policy of Xuzhou.
As a national leader in the development of industrial agriculture, VV features a complete industry chain related to grain, edible oil and food, with everything needed for a high-quality development. Currently it is encountering problems for grain business, which can be fixed by Xinsheng Group with its advantages in leading state-owned assets.
With complementary strength, VV can open an upward channel for its development of grain industry. It is expected to set up an industrial cluster for grain logistic worth of hundreds of billions of RMB.
Thirdly, the acquisition is in the interests of the development and reform of Xinsheng Group.
Xinsheng Group is now in a critical development period during marketization transformation, it could improve its operation ability via learning about matured operation and regulated management from VV, a listed company.
Besides, learning from VV, a listed company, about capital operation could pave the way for Xinsheng Group's industry to go public.
Last, we are optimistic about VV's long-term development.
VV is a well-known brand featuring the concepts of health and quality production. Its 30 years of market operation places the company in an advantageous position for market competition.
The company has been in a financially healthy status, without any major financial, legal risks, with its traditional primary product "soybean milk power" leading the industry for years.
VV set up the strategy of "Return to Industrial Business and Focus on Main Business" in 2016, as well as the strategy of "Ecological agriculture, Great Industry and Outstanding Food." It began to scale off non-relevant businesses, consolidate its share in the soybean milk powder industry, expand its plant-based protein drink with new products and businesses, and put more efforts to grain procurement, storage and processing, as well as healthy products producing. The company forms a strategy of development driven by two wings and two cores, and a complete industrial chain ranging from the fields to the table.
As the new strategy rolls out, the company's growth will be promising.
What's Xinsheng's development plan for VV after the acquisition?
Firstly, Xinsheng will engage in VV's administration.
Now, Xinsheng Group has nominated two directors to join VV's board of directors. The move can help optimize VV's administrative structure for legal persons, regulate company management and operation, and safeguard a healthy development for the company's future.
Secondly, with each other's strength, they can carry out cooperation in industrial development and capital operation.
Xinsheng Group, a large state-owned company in Xuzhou city, is a top city service provider, boasting advantages regards to policy resource, asset size, city construction, service and industries, in a great position to assist VV in property operations.
VV is a listed company (A-share), has its own competitive advantages in the markets of capital, grain, and food & beverage.
In the future, they can complement each other, carry out cooperation in terms of industrial investment, assets integration, and going public, being useful to each other's development, leading to a co-transformation and upgrade for businesses with improved overall strength.
www.cnxz.com.cn November 22, 2019
