Changpeng Wan
The Recapitalization Shakeup
A Sudden Transfer of Power
Liangpinpuzi’s three founders executed a rapid succession of agreements transferring control of the publicly traded snack giant. At 12.42 yuan per share, the founders extracted 10.46 billion yuan while second-largest shareholder Today Capital pocketed 4.45 billion yuan. The primary buyer was Wuhan Changjiang Guo Mao—a Wuhan State-Owned Assets Supervision and Administration Commission (武汉国资委) entity—through a meticulously structured state-owned asset recapitalization.
Recapitalization Mechanics
This intricate deal addressed founder share pledges through phased payments: Stage 1 released 1 billion yuan to unblock initial pledges; Stage 2 injected 4 billion yuan after dispute resolution; final payments followed documentation verification. Such safeguards specifically mitigated recapitalization risks while installing Changjiang Guo Mao as controlling shareholder (29.99% stake), reducing founders to 9.22% ownership. Simultaneously, Wuhan Dongxihu District state assets acquired 5.1% for 254 million yuan.
Legal Firestorm Erupts
The Unfinished Guangzhou Deal
Just as Wuhan finalized its state-owned asset recapitalization, Guangzhou Light Industry Group (广州轻工) froze 19.89% of Liangpinpuzi shares. Crisis originated from May negotiations where founders agreed to sell 79.764 million shares—also at 12.42 yuan/share to Guangzhou—transferring control. When signing day arrived, Guangzhou representatives stood ready while Liangpinpuzi founders ghosted the meeting, opting instead for Wuhan’s state-owned asset recapitalization offer.
Jurisdictional Battle Lines
Guangzhou Light Industry secured emergency injunction against what it considers contractual betrayal. Assets remain frozen pending court resolution, exposing recapitalization governance vulnerabilities. As Shanghai Jiaotong University corporate law expert Dr. Wang (王一民) observes: “This duel exposes how China’s state-owned investors often prioritize speed over due diligence during acquisitions.” With both governments demanding ownership via state-owned asset recapitalization channels, Liangpinpuzi loses vital restructuring momentum.
Liangpinpuzi’s Market Meltdown
Early Snack Industry Dominance
Launched in Wuhan in 2006 during China’s premiumization wave, Liangpinpuzy pioneered “high-quality, high-aesthetics, high-service” positioning that captivated consumers. After securing Today Capital’s landmark 51 million yuan Series A (2010), valuation skyrocketed from 176 million to 6.9 billion yuan pre-IPO. Its 2020 listing as “premium snack first share” achieved 34 billion yuan market capitalization but masked underlying fractures.
- 2020 Peak: 340+ billion yuan valuation
- 2024 Performance: Forecasted 75-105 million yuan net loss
- Revenue Decline: 94.4 billion yuan (2022) → 63.1 billion yuan (2024)
Profitability Collapse Accelerates
Two catastrophic pressures now drive losses: forced price reductions amid consumer shift toward budget-conscious brands like Zhao Yiming Snacks and collapsing government subsidies. Provincial grants dropped from 100+ million yuan annually pre-IPO to just 23.96 million yuan as of June—representing 52% of 2024 profits. Former COO Zhang Hongwei (张宏伟) notes: “Liangpinpuzy clung to outdated luxury models while discount retailers built TikTok communities.”
Missed Strategic Inflection Points
Social Commerce Blind Spot
Despite early leadership on Tmall and JD.com, Liangpinpuzi ignored social commerce revolution. Competitors like Salted Duck Shop leveraged Douyin influencers reaching 200 million daily users while Liangpinpuzy delayed platform investments until 2023—ceding entire customer cohorts.
Discount Snack Miscalculation
The defining blunder emerged in discount retail. After investing 45 million yuan for 3% of Zhao Yiming Snacks in February 2023, Liangpinpuzy sold its stake for 105 million yuan eight months later. Twenty-two days post-sale, Zhao Yiming merged with Snack Very Busy to form discount leader Mingming Hen Mang—now courting Hong Kong IPO valuations exceeding $3 billion USD. Liangpinpuzy responded with lawsuits alleging undisclosed merger negotiations.
Investment Appeal Amidst Carnage
The State-Owned Gambit
Behind Wuhan and Guangzhou’s state-owned asset recapitalization pursuit lies strategic utility: Liangpinpuzi’s surviving physical network (2,800+ stores) offers instant provincial infrastructure integration. Wuhan aims immediate merger synergies across its food manufacturing ecosystem while Guangzhou seeks gateway access across southern China.
Shrinking Valuation Reality
Liangpinpuzi’s market capitalization imploded from 34 billion yuan to just 5 billion yuan since 2022—a staggering 85% destruction signaling fundamental abandonment. SAIC Motor auditor Cheng Fang (程芳) warns: “Recapitalization urgency reflects state investors chasing nostalgia over fundamentals.” Meanwhile as legal disputes prolong, Massachusetts Institute of Technology research confirms average 17% asset value deterioration from protracted jurisdiction battles.
The Road to Resolution
Parallels emerge between Liangpinpuzy’s shareholder conflict and its Zhao Yiming lawsuits—both promise years-long resolution timelines draining resources. Beijing Legal Arbitration Center precedent suggests Wuhan likely prevails but relationships remain irreparably damaged. For its crippled brand, regulators allow recapitalization lifelines at devastating terms: four wholesale inventory markdowns since November signal irreversible premium erosion. Investors should watch Guangzhou Superior Court rulings Q3-Q4 2024 while avoiding comparable state-private hybrid investments awaiting China’s Corporate Governance Reform Bill ratification.
