(Yicai Global) March 24 -- Qianweiyangchu Food, a leading Chinese producer of packaged foods and beverages, will enter China’s fast-growing bubble tea market by acquiring the shares that it does not already own of a supplier of tapioca balls at a cost of CNY41.9 million (USD6.1 million).

Qianweiyangchu will raise its stake in Weibao Food from 20 percent to 100 percent, the Zhengzhou-based company said yesterday. To fund the acquisition and build food processing projects, the firm plans to raise as much as CNY590 million (USD86.2 million) from up to 35 investors in a private placement of shares, it added.

Kunshan-based Weibao Food supplies bubble tea ingredients to many Chinese companies, including Yum China Holdings, the operator of Kentucky Fried Chicken and Pizza Hut restaurants in China, and Qianweiyangchu’s main client. Weibao has an annual production capacity of 15,000 tons of tapioca balls.

The acquisition will help bring Qianweiyangchu closer to Yum China, while helping the firm to expand its business-to-customer segment in the tea beverage sector, it noted.

Affected by Covid-19 outbreaks in China last year, Weibao reported a net loss of CNY4.2 million (USD613,600) for 2022, versus a net profit of CNY12 million in 2021. Revenue tumbled 44 percent to CNY42.5 million.

In the first three quarters of last year, Qianweiyangchu’s net profit jumped 23 percent to CNY69.7 million from a year earlier, according to the company’s latest earnings report. Revenue rose 16 percent to CNY1 billion (USD146 million).

Shares of Qianweiyangchu [SHE: 001215] ended little changed today, rising 0.1 percent to CNY71.33 (USD10.41).

Editor: Futura Costaglione