Financial News Agency, December 1 (Reporters Liu Jian and Wang Ping An) - Not only was the high-premium acquisition advertised by Zeng on a large scale not successful, but Dabeinong (002385.SZ) “caused trouble” as a result.

Recently, Dabeinong's acquisition of Jiuding Technology was lost again in the second trial after the first trial. The Hunan Provincial High People's Court rejected the appeal and upheld the original judgment. Furthermore, the handling fee for the second instance case was 5.39 million yuan, which was borne by Beijing Dabeinong Technology Group Co., Ltd.

“The subsequent resolution [of this matter] is not easy to say to the outside world. We have a way to deal with it, but we cannot announce it to the public. The second instance verdict will definitely be executed. (This matter) won't have any impact on our company's feed business.” The reporter learned from the Dabeinong Securities Department as an investor.

Looking back at the timeline, at the beginning of last year, Dabeinong bought 30% of Jiuding Technology's shares at a price of 1.32 billion yuan. At the time, Dabeinong believed that Jiuding Technology had a huge advantage in the feed business in Hunan. After the company's acquisition of Jiuding Technology, it is expected to become a leading feed enterprise in the southwest region. At the same time, it can take advantage of the scale effect to reduce costs and increase efficiency.

By August 14 of last year, Dabeinong had received a “Notice of Response” from the Yueyang Intermediate People's Court in Hunan Province. Yang Lin, the actual controller of Hunan Jiuding Technology, sued Dabeinong, demanding that the company pay a second equity transfer of 396 million yuan and pay liquidated damages according to 0.5‰ per day. As of July 25, 2022, the amount of liquidated damages was 4.95 million yuan. This was also the result of the first instance judgment.

Subsequently, the company filed an appeal with the Hunan Provincial High People's Court for disapproval. According to Dabeinong's announcement last night, the case had another outcome. The Hunan Provincial High People's Court ruled: the appeal was rejected and the original sentence was upheld; the handling fee for the second instance case was 5.39 million yuan, which was borne by Beijing Dabeinong Technology Group Co., Ltd., and this judgment was final.

Regarding the loss of the lawsuit in the second instance, Dabeinong said, “The amount involved in this judgment did not reach 10% of the company's audited net assets in 2022. The above litigation matters do not affect the normal operation of the company's current business.”

In fact, in addition to the dispute over the acquisition of Jiuding Technology, Dabeinong announced in early 2022 that it plans to acquire 8 feed subsidiaries of Zhengbang Technology in the southwest region for 2 billion to 2.5 billion yuan is also in a similar situation. According to reports, once the acquisition is completed, it will not only bring about 3 million tons of feed production capacity to Dabeinong, but also quickly and effectively improve its industrial layout in the southwest region.

The aggressive acquisition of Dabeinong is not unrelated to its plans to expand its feed sector. Beginning in recent years, competition in the domestic feed industry has gradually intensified, and small enterprises have continued to withdraw. Large enterprises, with advantages such as region, procurement, and formulation, have continued to develop mergers and acquisitions to expand in order to further expand their market share. However, due to insufficient due diligence, such scheduled acquisition transactions can easily lay risks for the future.

“In this type of transaction, to balance risk and benefit, it is best for listed companies to be less aggressive and risky, and make a decision after conducting a comprehensive and detailed examination of the production, technology, and market type characteristics of the acquirer and target company.” Earlier, an analyst told reporters.

It is worth mentioning that in the report for the third quarter of 2023, Dabeinong stated that it has initiated plans for both related acquisition cases. As of September 30, 2023, it is estimated that Zhengbang Technology's equity loss amount is 200 million yuan, and the pending lawsuit against Jiuding Technology is estimated to have accrued an estimated debt of 128 million yuan.