On October 29, the "Star Market Daily" (Reporter Xu Cihao) reported that following Miniso becoming a major shareholder of Yonghui Superstores, another merger and acquisition is set to take place in the consumer industry.

On October 28, Three Squirrels issued an announcement that its wholly-owned subsidiary Anhui A Thing Venture Capital Co., Ltd. (referred to as "A Thing Venture Capital") plans to invest a total of no more than 0.36 billion yuan to acquire the controlling rights or related businesses and assets of Hunan Love Snacks Technology Co., Ltd. (Love Snacks), Future Has Arrived (Tianjin) Technology Development Co., Ltd. (Ai Discount), and Anhui Zhixiang Food Co., Ltd. (Zhixiang Food).

Zhang Liaoyuan makes a move in the snack track.

It is reported that the current transaction is still in the preliminary planning stage, and the specific transaction plan needs further negotiation and confirmation.

It is worth mentioning that A Thing Venture Capital was just established on October 24th, with Pan Daowei as the legal representative, registered capital of 0.1 billion RMB, and its business scope includes venture capital, investment activities with its own funds, asset management services involving investments of its own funds, enterprise management consulting, and information consulting services, among others. Shareholder information shows that the company is wholly owned by Three Squirrels.

According to the announcement, in this transaction arrangement, Anhui A Thing Venture Capital Co., Ltd. plans to acquire the controlling rights or related businesses and assets of Love Snacks for no more than 0.2 billion yuan; plans to acquire the controlling rights or related businesses and assets of Ai Discount for no more than 0.06 billion yuan; plans to acquire the controlling rights or related businesses and assets of Zhixiang Food for no more than 0.1 billion yuan.

Love Snacks was established in 2020 by Dai Shanhui and Tang Guangliang. Love Snacks transformed from the community group buying platform Food Enjoyment House and had previously received investments from institutions such as Galaxy Holding.

Love discounts is a offline chain brand, established in 2020, and completed a tens of millions of yuan angel round financing led by Unique Capital and followed by Zhongding Capital in 2021. Zhiyang Foods was established in 2014, a modern conglomerate engaged in walnut base construction and walnut protein beverage sales.

Three Squirrels announced that in recent years, the rapid rise of offline retail formats such as bulk snacks and community discount supermarkets, as well as the emergence of new channels, has led to the prosperity of new product categories. Through deep cooperation with Love Snacks, Love Discounts, and Zhiyang Foods, leveraging the Three Squirrels brand, supply chain, and management capabilities to jointly expand the offline market and enter the new dairy beverage track.

According to China Foods industry analyst Zhu Danpeng, Three Squirrels has benefited from the light asset model dividend, but also faced challenges of performance ambiguity and immature supply chain. Faced with these predicaments, it chose to strengthen supply chain management, which is a wise move. At the same time, Three Squirrels formed a strategic cooperation with Love Snacks, which helps it further integrate resources.

Zhu Danpeng stated that Three Squirrels is gradually realizing the integrated online and offline operation model proposed in 2019. "This strategic adjustment is expected to bring new development opportunities for Three Squirrels, helping it break through the predicament."

The era of consolidation and mergers and acquisitions in the consumer industry.

According to the report "Review and Future Outlook of China's Consumer Industry M&A Activities in 2023" released by PricewaterhouseCoopers in May of this year, China's consumer industry investment and M&A transactions began to cool down after reaching its peak in 2021, with a total industry M&A transaction amount of $23.77 billion in 2023, a total of 599 transactions, showing a downward trend compared to previous years, but with an increase in the proportion of large transactions.

It is worth mentioning that in 2023, enterprise mergers and acquisitions were relatively active, with the proportion of enterprise mergers and acquisitions transactions in the China consumer industry being the highest in nearly 3 years. This is also reflected in the bulk snacks track.

Not only Three Squirrels in the acquisition of bulk snacks, Wanchen Group announced in September last year the successive acquisitions of Hoxianglai, Laiyoupin, Amdiadi, Luxiaochan, Laopodaren 5 snack brands merged and named as "Haoxianglai". According to its semi-annual report, the number of nationwide stores is 6638.

After Love Snacks officially acquired Dinosaur and Teddy in Chengdu, Sichuan in August last year, it fully acquired Hu Weihong Snacks in Guizhou in September of the same year. Later on October 19th last year, Hunan Love Snack Group officially announced the acquisition of Shaanxi local brand - Snack Bubble, bringing the total number of stores nationwide to over 1800.

Southern snack chain leading brand Snack Cabin strategically integrated all the stores of Guangdong snack chain Snack Me Me in October last year, marking the first shot of mergers and acquisitions in the southern snack chain, and officially announced that the number of stores exceeded 600.

Busy Snacks and Zhao Yiming Snacks also achieved a strategic merger in November last year, and announced in July this year that they have surpassed 0.01 million stores, becoming the first chain brand with over ten thousand stores in the bulk snack market.

On September 30th, it was announced that Bailian Group stated in a notice that the company's holding subsidiary Shanghai Bailian Commercial Brand Investment Co., Ltd. plans to participate in the establishment of Shanghai Bailian GTJA Industrial Innovation Leading Fund (tentative name).

The initial subscription size of the fund mentioned above is 2 billion yuan, with Bailian Commercial Brand contributing 0.6 billion yuan as a limited partner, accounting for 30% of the contribution. The fund has a lifespan of 10 years, focusing on consumer segmentation areas, adopting a dual GP model, and having a specific investment decision-making committee composition, project exit methods, fund management fees, and profit distribution methods.

Regarding the wave of mergers and acquisitions in the consumer industry, the analysis in the report above points out that on one hand, investment institutions and companies tend to focus more on their own business development, enhancing the market share and industry competitiveness of the acquirer through resource integration, achieving economies of scale. On the other hand, influenced by the economic cycle, the valuation of the acquisition targets is more reasonable.

In the view of Wang Weiwei, managing partner at Huaying Asset Management, the characteristics of the Chinese consumer market are 'large' and 'diverse', providing opportunities for companies. Many companies have not yet reached a dominant position or formed a monopoly. Therefore, the market conditions are not enough to affect individual projects.

"From the perspective of fund exit, as investors, specific requests for the IPO of invested companies will not be made, with the fundamental expectation being business expansion. Even if they cannot go public, many foreign consumer companies have achieved scale expansion through rounds of mergers and acquisitions. Therefore, from 2024 to 2030, China will also usher in an era of consolidation and mergers in the consumer industry, with room for capitalization." Wang Weiwei mentioned.