The state-owned wine supplier Changyu Group Co. Ltd., announced a plan to privatize its assets, selling most of the shares to a local corporation and an Italian investment company.
According to Thursday's announcement, 45 percent of the shares were sold to the Yantai Yuhua Investment Development Corporation at 387.99 million yuan (US$46.7 million) and 33 percent were bought by Illva Saronno Investments of Italy with 481.42 million yuan (US$58 million).
A leading wine producer for almost 100 years, Changyu was a listed state-owned company with assets of 1.47 billion yuan (US$177 million) in the Yantai, a city in east China's Shangdong Province.
Changyu's owner, the Yantai Bureau of SASAC, which held 55 percent, was set to transfer 43 percent to foreign investors.
Observers said apart from the 33 percent sold to the Italian company, the remaining 10 percent would probably go to the US-based J.P. Morgan Chase & Co., though such speculation is unconfirmed.
But analysts discovered that the Yuhua, founded recently by senior Changyu managers and officials, bought the shares at an extremely low price.
Experts said 45 percent of the company is worth 661 million yuan (US$79.6 million) and suspected that the state-owned company was "taken unfairly" in an MBO (management buyout).
The contract will not be valid until it is approved by central government authorities such as the Ministry of Commerce and the State-Owned Assets Supervision and Administration Commission (SASAC).
(Xinhua News Agency February 20, 2005)
