China Kangda Food Company Limited Announces Major Share Purchase Agreement and Possible Mandatory Cash Offer – Details of Acquisition, Offer Terms, and Public Float Maintenance 1

China Kangda Food Faces Major Shakeup: HK\$0.265 Per Share Buyout Triggers Mandatory Cash Offer

Key Points Investors Must Know

Majority Stake Sale: Hong Kong Sheng Yuan Holding Co., Limited (“Offeror”) has entered into a Share Purchase Agreement to acquire approximately 54.69% of China Kangda Food Company Limited (“Kangda Food”) for HK\$65.64 million, equivalent to HK\$0.265 per share.
Trigger for Mandatory Offer: Following this acquisition, a possible unconditional mandatory cash offer will be made to all remaining shareholders at HK\$0.265 per share—the same price as the controlling stake purchase.
Premium Over Market Price: The offer price represents a 16.23% premium over the last trading price before suspension, but a steep discount—over 78%—to the company’s most recently reported net asset value per share.
Trading Halt and Resumption: Trading in Kangda Food shares was halted pending the announcement and is scheduled to resume on 24 October 2025.
Intent to Maintain Listing: The Offeror intends to maintain the company’s listing on both the Hong Kong and Singapore stock exchanges, but warns that trading may be suspended if the public float falls below 25% after the offer.
Independent Review: An Independent Board Committee and Independent Financial Adviser have been appointed to advise shareholders on whether the offer is fair and reasonable.
Completion in Two Batches: The acquisition will be completed in two stages due to cross-border share migration requirements.
Change of Control, No Immediate Major Changes: Despite the change in control, the Offeror does not plan for immediate operational changes or asset disposals but will review the business for potential strategic moves post-offer.
Potential Board Changes: The Offeror intends to nominate new directors, but names have not been finalized.

Detailed Acquisition and Offer Terms

On 18 October 2025, Zenith Hope Limited (the Seller) agreed to sell its entire 54.69% stake (247,708,066 shares) in Kangda Food to Hong Kong Sheng Yuan Holding Co., Limited for a total cash consideration of HK\$65,642,637.49, or HK\$0.265 per share. The purchase will occur in two installments:

First Batch: 240,748,400 shares (53.15% of issued shares) listed in Hong Kong;
Second Batch: 6,959,666 shares (1.54%) listed in Singapore, to be migrated to Hong Kong for completion.

The split is due to logistical requirements for transferring Singapore-listed shares. The process is expected to take 4-6 weeks after the first batch’s completion.

Mandatory Cash Offer Details

Upon completion of the first batch acquisition, the Offeror—who previously had no shares—will trigger Rule 26.1 of the Hong Kong Takeovers Code, requiring a mandatory unconditional cash offer for all remaining shares at HK\$0.265 per share.
The offer is final and will not be increased.
The offer is unconditional, meaning it does not depend on any minimum level of acceptance.
The offer covers all 205,239,934 shares not already acquired, valuing the company’s entire equity at HK\$120,031,220.

Premium and Discount Analysis

The offer price of HK\$0.265 per share is:
- 16.23% above the last traded price (HK\$0.228) before suspension,
- 16.74% higher than the 5-day average (HK\$0.227),
- But represents a ~79% discount to net asset value per share, which was HK\$1.253 (audited, Dec 2024) and HK\$1.269 (unaudited, June 2025).
Highest trading price in the prior 6 months was HK\$0.248; lowest was HK\$0.145.

Financial Resources and Funding

The Offeror will fund the acquisition and the cash offer entirely with personal funds from Mr. Gao Sishi, its sole owner and director. Joint financial advisers DL Securities and uSmart Securities have confirmed sufficient resources to complete the deal.

Shareholding Structure Before and After Acquisition

Shareholder	Before Completion	After 1st Batch	After 2nd Batch
Offeror	0%	53.15%	54.69%
Seller	54.69%	1.54%	0%
Public	45.31%	45.31%	45.31%

What Shareholders Must Watch

Acceptance Deadline: Details and forms for accepting the offer will be provided in a composite document, to be sent within 21 days of this announcement.
Stamp Duties: Hong Kong shareholders accepting the offer will pay seller’s ad valorem stamp duty (0.1%), deducted from the cash payment; Singapore shareholders are exempt from seller’s stamp duty.
Irrevocable Acceptance: Acceptances of the offer are binding and cannot be withdrawn.
Tax Considerations: Shareholders should seek their own tax advice regarding acceptance.
Potential Suspension Risk: If, after the offer, the public float drops below 25%, share trading could be suspended until the float is restored.
Change of Control: Investors should anticipate possible board changes and strategic reviews post-acquisition, though no immediate operational overhaul is planned.
No Outstanding Options: The company has no outstanding options, warrants, or convertible securities that could dilute shareholdings.
Independent Advice: No recommendation is made by the board at this stage; shareholders are urged to read the independent committee’s advice in the upcoming Composite Document before acting.

Background of the Offeror

Mr. Gao Sishi, 68, is the sole owner and director of the Offeror. He has over 30 years of food industry experience and previously served as chairman of Kangda Food’s board. He expects the acquisition to enable long-term growth, capital injection, and strategic upgrades for Kangda Food.

Kangda Food’s Recent Performance

For the year ended 31 Dec 2024: Revenue RMB 1.65 billion; net loss RMB 21.6 million.
Net assets attributable to shareholders (June 2025): RMB 524 million.

Next Steps and Timeline

Composite Document, including advice from the Independent Board Committee and Financial Adviser, will be sent to shareholders within 21 days.
Further announcements will be issued regarding completion, offer timetable, and any changes to Board composition.
Trading in the shares will resume on 24 October 2025.

Investor Takeaways

The offer provides a liquidity event at a premium to market price, but at a deep discount to net asset value. This could prompt price volatility and a reassessment of the company’s valuation.
Shareholders must decide whether to accept the cash offer or remain invested under new control, with future strategy still unclear.
Key risks include potential trading suspension if the public float drops and uncertainty over future board and strategic moves.
This transaction will almost certainly move the share price; investors should monitor further announcements closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Shareholders should carefully review official documents, consult the Composite Document and seek independent professional advice before making any investment decisions. The author is not responsible for any investment decisions made based on this summary.