Wuliangye Yibin Co., Ltd. (000858.SZ) on February 24, 2009 announced to buy the package material, paper box and related assets from Wuliangye Group, the parent of it.
Pursuant to the announcement of the Shenzhen-listed company, Wuliangye Yibin is to acquire 100% equity of Sichuan Yibin Push Group 3D, Ltd., Sichuan Yibin Puguang Science Co., and a Sichuan Yibin-based packing material company. The deal would cost CNY 3.8 billion in total. As the biggest acquisition ever conducted by Wuliangye, the transaction is expected to complete in the first half of this year.

Established in August 2008, the packing material company under China Push Group has a registered capital of CNY 150 million. It is mainly engaged in the production of alcohol packing materials and beverage packing materials.

Wuliangye Group as the parent of Wuliangye Yibin is believed to clean up the associated transactions with the listed vehicle through the deal and then strive for diversified operation.

The health protection drink is another profit stream for the parent group. Last October, Wuliangye Group inked a 30-year agreement with Giant Investment Co., planning to invest CNY 300 million into the health protection drink market in the coming five years, with expectation for CNY 800 million sales revenues annually. Up to now, Wuliangye Group has earned CNY 700 million retail incomes ever since the health protection drink hit the market, according to the group's public relation center. The group has added more such production lines this year, the center added.

However, the group's health protection drink is mainly sold in shopping malls and supermarket, so it is a great challenge to win more market share in the future.

Taking a leading position in China Mainland's alcohol market, Wuliangye Group has also entered the clothes making sector in an attempt to boost diversified operation. A garment making company with a registered capital of CNY 420 million would soon start operation, which aims to become the biggest clothing manufacturing base in southwest China.

However, some analysts did not hold positive outlook for the move, considering the gloomy situation in clothes market. Data on China TexNet showed that the clothes export value hit USD 110.8 billion for China in 2008, just a slight increase of 1.10% than a year ago. And, the figure is predicted to be negative 15% in 2009. Growth of domestic clothes sales also dropped to 12% from 20% in 2007.