Jiumaojiu to Acquire an Additional 3% of Tai Er Sauerkraut Fish for RMB 300 Million

This is an English adaptation of a FoodBud historical article originally published on September 6, 2021.

Jiumaojiu planned to buy an additional 3% stake in Tai Er Sauerkraut Fish for RMB 300 million, implying a pre-acquisition valuation of RMB 10.191 billion for Tai Er Catering.

On September 6, Jiumaojiu announced that its indirect wholly owned subsidiary Tai Er Investment, as buyer, had entered into an equity transfer agreement with Huzhou Jiajun, as seller. Under the agreement, Huzhou Jiajun would sell, and Tai Er Investment would acquire, 3% of Tai Er Catering, an indirect non-wholly owned subsidiary of Jiumaojiu.

Transaction details

The transaction was expected to complete within 30 days after the equity transfer agreement date, once the industrial and commercial registration change for the 3% equity transfer was completed.

After completion, Jiumaojiu's stake in Tai Er Catering would increase from 85% to 88%.

Tai Er Investment was established in China on June 28, 2020. It is an indirect wholly owned subsidiary of Jiumaojiu and serves as the investment holding company for the interests in all Tai Er restaurants in China.

Huzhou Jiajun's original investment cost for its interest in Tai Er Catering was approximately RMB 3.5 million, representing cumulative capital contributions made by its partners to Tai Er Catering as of September 5. Before the acquisition, Tai Er Catering was valued at RMB 10.191 billion.

Huzhou Jiajun is a limited partnership established in China and held by Jiumaojiu employees for their investment in Tai Er Catering. It had no investments other than Tai Er Catering. As of September 5, Huzhou Jiajun held 15% of Tai Er Catering, making it a connected person of Jiumaojiu at the subsidiary level.

Tai Er's role in Jiumaojiu's portfolio

Jiumaojiu is mainly engaged in the management and operation of Chinese restaurant brands, including restaurant operations, delivery, and specialty product sales. Its brands include Jiumaojiu, Tai Er, 2 Eggs Pancake, Song, and Uncle Chef.

Jiumaojiu Northwestern Cuisine and Tai Er Sauerkraut Fish were the group's two main revenue contributors. In the first half of 2021, they generated RMB 382 million and RMB 1.603 billion in revenue, respectively, accounting for 18.9% and 79.3% of total revenue.

Tai Er had expanded rapidly, from 13 stores in 2016 to 286 stores in the first half of 2021. In 2020, Tai Er generated RMB 1.962 billion in revenue, accounting for 72.3% of total revenue and surpassing Jiumaojiu Northwestern Cuisine for the first time as the group's main performance contributor.

Public information cited in the article identified He Chengxiao as Tai Er's general manager and an executive director of Jiumaojiu. The article also noted that Cao Hui was Tai Er's product R&D director, while He Tianliang was general manager of Beijing Tai Er.

Note: transaction, valuation, and ownership figures are historical as of the September 2021 announcement.