Core Viewpoint - The proposed acquisition of Hubei Daguan Tea Industry Group by Oriental Rise Holdings is expected to enhance upstream supply control, improve product mix, and advance the company's vertical integration strategy [1][2]. Company Overview - Oriental Rise Holdings Limited is an integrated tea supplier in mainland China, focusing on the cultivation, processing, and sale of tea products, including primarily-processed and refined white and black teas [8]. - The company operates tea gardens in Zherong County, Ningde City, Fujian Province, and serves both wholesale distributors and end-user retail customers [8]. Proposed Transaction Details - The company has entered into a non-binding letter of intent to acquire a controlling equity interest in Daguan Tea, a leading tea producer and processor based in Hubei Province [1][2]. - The transaction aims to strengthen control over core tea raw material resources, optimize cost structure, and enhance the development of higher value-added tea products [2]. Strategic Benefits - If completed, the acquisition is expected to generate strategic benefits by combining Oriental Rise's public company platform, capital market access, branding capabilities, and nationwide distribution network with Daguan Tea's upstream resources and production strengths [5]. - Anticipated benefits include improved supply stability and quality control, a more favorable product mix with increased exposure to higher-margin offerings, enhanced supply-chain coordination, and improved operating leverage for future growth initiatives [5]. Daguan Tea Overview - Daguan Tea is a vertically integrated tea enterprise with operations in tea cultivation, processing, product development, and brand management [3]. - The company has substantial self-owned tea plantation resources and modern production facilities capable of producing a wide range of tea products, including premium and export-grade teas [3][4]. Vertical Integration Strategy - The proposed acquisition reflects Oriental Rise's ongoing execution of its vertical integration strategy, focusing on expanding across the tea value chain from cultivation to export [6]. - Management emphasizes that securing upstream resources and production capacity is crucial for enhancing long-term competitiveness and earnings quality in the tea industry [7].
Oriental Rise Holding Limited Signs Non-Binding Letter of Intent to Acquire Hubei Daguan Tea Industry Group