---
title: "Dali Foods Plans Privatization and Delisting, Shares Surge Nearly 32% After Resumption"
description: "On the evening of June 27, Dali Foods, which had been suspended for nearly a week, announced its intention to initiate privatization and delisting, with trading resuming on June 28. As a result, Dali Foods' share price surged 31.98% at the open, closing at HK$3.50, up 28.67%. The major shareholder proposed the privatization."
author: "New Distribution"
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published: "2023-06-29"
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# Dali Foods Plans Privatization and Delisting, Shares Surge Nearly 32% After Resumption

> On the evening of June 27, Dali Foods, which had been suspended for nearly a week, announced its intention to initiate privatization and delisting, with trading resuming on June 28. As a result, Dali Foods' share price surged 31.98% at the open, closing at HK$3.50, up 28.67%. The major shareholder proposed the privatization.

On the evening of June 27, Dali Foods, which had been suspended for nearly a week, announced that it planned to initiate privatization and delisting, and announced the resumption of trading on June 28. Affected by this, Dali Foods' share price rose sharply at the open, with an increase of 31.98%, and closed at HK$3.50 on the same day, up 28.67%.

**Major Shareholder Proposes Privatization**

According to the announcement, Dali Foods and the offeror Rongshi International jointly announced that on June 27, 2023, Rongshi International requested the board to propose to the scheme shareholders a proposal to privatize Dali Foods by way of a scheme of arrangement under Section 86 of the Companies Act, involving the cancellation of scheme shares. Trustee shares will not form part of the scheme shares and will not be cancelled. The offeror will hold approximately 96.11% of the issued shares, the trustee will hold approximately 3.89% of the issued shares, and the listing of the shares on the Stock Exchange will be withdrawn. The proposal will be implemented through the scheme. Under the scheme: founder shares will be cancelled, with the consideration for cancellation of founder shares being the issuance of offeror shares to the founder, equivalent to the total cancellation price of all founder shares; and scheme shares (other than founder shares) will be cancelled in exchange for a cash payment of HK$3.75 per scheme share. The cash cancellation price of HK$3.75 per scheme share represents a premium of approximately 37.87% over the closing price of HK$2.72 per share on June 20, 2023. As of the date of the announcement, the entire issued share capital of the offeror is wholly owned by the founder Xu Shihui, who serves as an executive director. As of the date of the announcement, the sole director of the offeror is the founder.

Regarding the reasons for the privatization and delisting, Dali Foods Group stated that **the company's shares have been trading in a relatively low price range with limited trading volume, which is inconsistent with the company's position in the industry and fails to convey its true value to the market.** It is understood that since its initial public offering in 2015, Dali Foods has not raised any funds through equity issuance, so maintaining the listing status is of limited significance from a financing perspective, but it still incurs costs for maintaining the listing. After the proposal is implemented, the company will be delisted from the Stock Exchange, which will help the company save costs related to compliance and maintaining its listing status. Dali Foods is also seeking privatization to gain greater freedom and flexibility. **"In terms of business, Dali Foods will continue to operate its existing business, and Rongshi International has no specific plans to make major changes to the company's business after the completion of this transaction,"** said Rongshi International. In fact, the trend of privatization in Hong Kong stocks has become increasingly evident in 2023. As of now, including Dali Foods, six companies are waiting to complete delisting through privatization procedures. In the first half of this year, a total of 21 companies were delisted from the Hong Kong Stock Exchange, of which three completed delisting through privatization.

**The Urgent Task is Brand Renewal**

Since its founding in 1989, Dali Foods Group has experienced rapid development over the past 30 years and has grown into a comprehensive modern food enterprise group listed among China's top 500 private enterprises. On November 20, 2015, the group was listed on the main board of the Hong Kong Stock Exchange. Dali Foods Group focuses on the food industry, forming an industrial structure with two pillars: food and beverages, advancing side by side. Through a brand promotion model of large platforms, high density, and three-dimensional coverage, the group has enhanced its brand image. Its brands include Daliyuan, Haochidian, Kebike, Lehu, Heqizheng, Doudouben, and Meibeichen, all of which are well-known to consumers. However, with the slowdown of macroeconomic growth and increasingly fierce competition in the consumer goods industry, various new categories and brands have emerged like mushrooms after rain. Daliyuan foods, which focus on high sugar and high fat, are at a disadvantage, and the industry scale of baked pastries and puffed foods is also facing difficulties in growth. In this context, Daliyuan has innovatively launched multiple new products to cater to consumers' health needs, including the "SOULDAR" soda cracker series and Heqizheng's new low-sugar herbal tea "Hecha" with flowers and tea, but these have not made much of a splash. Over the past year, Dali Foods' revenue and net profit have both declined. In 2022, its operating revenue decreased by 10.48% year-on-year to RMB 19.957 billion, and net profit decreased by 19.73% year-on-year to RMB 2.99 billion. This was also the second consecutive year of net profit decline for Dali Foods; in 2021, its net profit decreased by 3.21% year-on-year to RMB 3.725 billion. In response, Dali Foods stated that this was mainly due to the significant increase in raw material prices such as cooking oil, eggs, and sugar. In addition to the above reasons, the industry believes that under the wave of new consumption, Dali Foods' brand matrix seems to be no longer young. In the future, Dali Foods needs to work hard on **product innovation, track innovation, and brand and marketing innovation**, deeply understand and launch personalized and customized products and services according to the needs of different consumer groups, so as to adapt to changing market demands, establish closer links with consumers, and maintain brand competitiveness.

**Final Thoughts**

China has a huge population base and a growing middle-class consumer group, which provides enormous market demand for the snack food industry. At the same time, with the improvement of people's living standards and changes in consumption concepts, consumers are increasingly concerned about product quality and safety, and they pay more attention to healthy, nutritious, and natural food choices. The snack food industry has also seen the emergence of new markets for healthy, organic, and functional products, creating more development opportunities for the industry. In summary, China's snack food industry faces huge market potential. However, industry competition is also fierce. Snack food enterprises need to continuously innovate, improve product quality, and pay attention to changes in consumer demand to maintain competitiveness and achieve sustainable development. Facing the current situation where many traditional enterprises are aging in brand and demand-side preferences are diversifying, whether Dali Foods can successfully transform after privatization and inject new brand vitality into the enterprise remains to be seen.


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