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China's Wuliangye to buy $55 mln assets from parent

Post Time:Feb 24,2009Classify:Company NewsView:386

Wuliangye Yibin (000858.SZ), a maker of traditional Chinese spirits, or "baijiu", said on Tuesday it will buy liquor-related assets from its parent for 3.8 billion yuan ($55 million), as part of its plans to cut costs through consolidation.

The purchase of labelling, packaging, bottling and glass-making businesses from Wuliangye Group will help to reduce purchasing and management costs at Wuliangye, the company said in a statement to the stock exchange.

"(The transaction will) effectively reduce related transactions with the group, thus helping to make our business more independent and sustainable," Wuliangye said.

Wuliangye faces rising competition from Kweichow Moutai Co (600519.SS) and Sichuan Swellfun Co (600779.SS) in the country's high-end baijiu market, as an economic slowdown hits consumption. Last February, Wuliangye unveiled a plan to buy more than 6 billion yuan of liquor-related assets from its parent company over the next three years. Analysts forecast that the asset injection would boost Wuliangye's profit by 1 billion yuan annually.

Wuliangye, based in southwestern China's Sichuan province, has also been shifting its focus to high-margin premium brands while shedding low-end products to improve profitability.

Wuliangye's shares were up 0.5 percent at 17.01 yuan in early trade, compared with a 0.5 percent drop in the mainland's benchmark Shanghai Composite Index .SSEC. (US$1=6.836Yuan)

Source: ReutersAuthor: shangyi

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