The founder and chairman of Dali Foods Group, Xu Shihui, plans to privatize the Chinese bakery and beverage business in a move that would take it off the Hong Kong Stock Exchange. Through his investment vehicle Rongshi International Investment, Xu has proposed a scheme of arrangement to delist the company.
Dali Foods, based in Fujian, Quanzhou, has been listed on the stock exchange since 2015. While the company’s revenue and profits declined in the previous financial year, this is not cited as a reason for the delisting plan in the joint stock-exchange filing.
According to the company’s annual report, Dali Foods recorded a revenue of 20 billion yuan ($2.7 billion), reflecting a 10.5% drop compared to the previous year. EBITDA also decreased by 18.4% to 4.8 billion yuan, and net profit fell by 19.7% to 3 billion yuan.
Under the proposed scheme, ‘scheme shares’ held by Dali Foods shareholders would be cancelled, excluding those held by the company’s trustees. Following the implementation of the scheme, Rongshi International would hold 96.11% of the shares, while the trustees would retain a 3.89% interest.
Xu, along with his family, owns 85% of the business, which equates to approximately 11.6 billion shares out of the total 13.6 billion in issue. Chinese billionaire Xu’s investment vehicle, Rongshi International, is the sole owner of the company.
As per the filing, “the scheme shares (other than the founder shares) will be cancelled in exchange for the payment of the cancellation price of HK$3.75 in cash for each such scheme share”. The company’s shares closed at HK$3.50 in Hong Kong today.
Dali Foods’ product portfolio includes a range of food and beverage items, such as biscuits, bread, puffed snacks, soy milk drinks, and herbal teas.