Xinjiang Korla Fragrant Pear Co.’s board of supervisors voted unanimously Nov. 24 to approve the company’s acquisition of Tongyi Petroleum Chemical Co., one of China’s largest independent lubricant suppliers.
The final hurdle to the proposed ¥1.4 billion (U.S. $223 million) deal is approval by shareholders, who are scheduled to consider the proposal at a meeting on Dec. 10.
The transaction would represent a realignment for Korla, an agricultural business based in Korla, the capital of China’s northwestern Uyghur autonomous region of Xinjiang. Until now its main activity has been growing of fragrant pears for which Xinjiang is famous, along with other types of fruit.
Korla had said last month that it was considering acquiring Tongyi from its current owners, Taiden Investment Holding Co., Huos Group Holding Co. and Weining Co. This week’s decision by the supervisory board also set the price of the transaction.
Along with notice of the vote by the board of supervisors, Korla filed a flurry of other disclosures on the Shanghai Stock Exchange this week, including Tongyi’s financial results for the first six months of 2019, 2020 and 2021. The lubricant company posted a net loss of ¥11 million for the first half of 2019, a net profit of ¥131 million during the first half of 2020 and a net loss of ¥449 million for the corresponding period of this year.
Operating revenue for those periods declined from ¥2.2 billion to ¥2.1 billion to ¥1.3 billion.
Korla’s financial performance has been declining for much of the past two decades. It has posted losses every year since 2012, although revenues for the first three quarters of 2021 — ¥110 million – were up from the same period of 2020. The company had a net loss for the period of ¥7.2 million.