(Yicai Global) Feb. 24 -- PepsiCo has agreed to pay USD705 million in cash to acquire all of leading Chinese online snacks firm Hangzhou Haomusi Foodstuff, also known as Be & Cheery, to expand in China.

Haomusi's parent company Haoxiangni Health Food penned the deal with PepsiCo Beverages Hong Kong on Feb. 21, the Henan province-based firm said in a statement yesterday.

Haoxiangni paid CNY960 million (USD137 million) for Haomusi in 2016, and its performance surged in the ensuing four years. Last year's CNY5 billion (USD711 million) in revenue made up about four-fifths of its parent's total income, the statement said. 

Competition in e-snacks has ratcheted up as rivals have gone public, said Haoxiangni, adding that Haomusi will also feel greater heat and face more calls for investor capital and resources. Its main competitors are Three Squirrels, which listed last July, and Bestore, which debuted in Shanghai today.

Haomusi's business model complements Pepsi's operations in China very much, said Ram Krishnan, the US beverage giant's global chief commercial officer and chief executive of its China operations, adding that the acquisition will help Pepsi expand online and offer more product varieties.

Founded in 2003, Hangzhou-based Haomusi's 1,000-plus products includes nuts, dried fruits, dried meat and candies, and it has more than 300 trademarks.

Haoxiangni's shares [SHE:002582] fell 2.1 percent today to close at CNY10.96 (USD1.56) each, after earlier swinging between a low of CNY10.08 and a 52-week high of CNY12.32.

The parent company will have enhanced cash flow after the sale to boost its core business of processed foods, which use jujubes (date-like fruits believed to be beneficial to women's health) as raw material. Haoxiangni will also use some of the funds to pare down its debt, the firm said.

Editor: Ben Armour