Great Wall sold back to parent company COFCO

Just one day after the news broke that China Foods Ltd, the Hong Kong-listed company owned by COFCO, had sold its wine business including Great Wall, it has been revealed  that the buyer is none other than China Foods’ parent company COFCO.

The unconventional sale, as dbHK has learned, is a strategic move by COFCO to direct China Foods’ focus solely to beverages instead of its wine business, which had suffered setbacks due to tepid performances from Great Wall, as seen in the listed company’s financial reports.

Previously under China Foods Ltd, a listed company in Hong Kong, Great Wall’s sales have been closely watched in public as one of China’s leading domestic wineries.

The sale of China Foods’ wine business back to its parent company COFCO will not require Great Wall to disclose its financial earnings under a non-listed company, a move that could give the company some flexibility to experiment with upcoming reforms and changes.

In a statement distributed to its clients and partners, COFCO stressed that “the sale has no impact on Great Wall or COFCO Wine & Wine’s business and operations”. After the sale, the two will be managed by COFCO Wine & Spirits, one of the 18 specialised companies under COFCO.

“The sale is to optimise capital and resources, the actual shareholder behind Great Wall and COFCO Wine & Wine is still COFCO, hence it has no effect on its business and management,” the company explains in the statement.

“It will benefit future reform for Great Wall and COFCO Wine & Wine, and help to introduce market mechanism for better strategic development,” it added.

Ma Jianping, chairman of China Foods Limited, added: “After disposing of the wine business and other non-beverage business, China Foods will become the only focused beverage platform among the 18 specialised companies of COFCO. It will not only allow us to direct all resources into developing beverage business, our clearly defined core operation. The disposal is also conducive to improving the company’s gearing ratio and increasing its earnings per share.”

The sale seems to be part of COFCO’s ongoing structure reform to consolidate its assets. The conglomerate has recently offloaded 36 ‘zombie firms’ through restructuring, asset sales, or bankruptcy, South China Morning Post reported.