Tsingtao Brewery Company Limited (Stock Code: 600600) has officially abandoned a 665-million-yuan acquisition plan initiated in May this year.
On the evening of October 26, Tsingtao Brewery announced that, as the preconditions for the equity transfer agreement had not been met, the company decided to terminate its acquisition of a 100% stake in Shandong Jimo Huangjiu Co., Ltd. (referred to as Jimo Huangjiu).
The termination of this deal not only dashes Tsingtao Brewery’s ambitions in the yellow rice wine market but also pushes ST Xinhua Jin (Stock Code: 600735) closer to delisting risks. The 665 million yuan from the sale of Jimo Huangjiu was originally intended to resolve ST Xinhua Jin’s 406-million-yuan capital misappropriation issue by its controlling shareholder.
**Brewing Giant’s Foray into Yellow Rice Wine** On May 7, Tsingtao Brewery announced plans to acquire Jimo Huangjiu for 665 million yuan, aiming to diversify its business beyond beer and explore new growth opportunities.
China’s beer industry has entered a phase of stagnant competition, with even market leaders facing slowing growth. In 2024, the country’s large-scale beer producers reported a 0.6% year-on-year decline in output, while Tsingtao Brewery’s revenue fell 5.30%.
Meanwhile, yellow rice wine, a traditional Chinese liquor, has gained renewed popularity amid the "Guochao" trend, driven by innovation from leading producers.
Jimo Huangjiu, a representative northern yellow rice wine brand established in 1949, saw its revenue grow 13.5% to 166 million yuan in 2024, with net profit surging 38% to 30.47 million yuan. The deal valued Jimo Huangjiu at a price-to-earnings ratio of 21.8x and a price-to-book ratio of 3.27x, reflecting Tsingtao Brewery’s high expectations.
**Termination Linked to Equity Freeze Crisis** Tsingtao Brewery cited unmet preconditions for the deal’s completion as the reason for termination. Behind this statement lies a months-long equity freeze crisis at Jimo Huangjiu.
Public records show that since September, Jimo Huangjiu has faced seven equity freezes totaling over 100 million yuan, linked to financial disputes involving its major shareholders, Xinhua Jin Group and Shandong Lujin Group. The latest freeze occurred on October 10, with 15.75 million yuan in equity frozen by a Shenzhen court until 2028.
Industry analyst Xiao Zhuqing noted, "The judicial freeze on Jimo Huangjiu’s equity likely triggered Tsingtao Brewery’s decision. Legal, timing, and regulatory hurdles made termination the only viable option."
The acquisition agreement stipulated that if preconditions were not met or waived within 120 days (by early September), the deal would automatically terminate. The freeze on Jimo Huangjiu’s equity constituted a "material adverse change," violating the agreement’s terms.
**ST Xinhua Jin’s Funding Crisis Worsens** The deal’s collapse deals a heavy blow to ST Xinhua Jin, which is embroiled in a capital misappropriation scandal. Regulatory filings show that its controlling shareholder, Xinhua Jin Group, owes ST Xinhua Jin 406 million yuan in non-operational funds.
Failure to recover these funds by February 2026 could lead to ST Xinhua Jin’s delisting. The 665 million yuan from Jimo Huangjiu’s sale was expected to cover this liability.
ST Xinhua Jin stated on October 18 that it would urge Xinhua Jin Group to liquidate assets and raise funds to repay the debt. However, time is running out.
Following the deal’s termination, ST Xinhua Jin’s stock opened lower on October 27 but rebounded to a 6.02-yuan limit-up by midday.
Market observers expect Xinhua Jin Group to accelerate asset sales to avert ST Xinhua Jin’s delisting.
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