(Yicai Global) March 19 -- China's state-owned service sector conglomerate Donghao Lansheng Group is rearranging the ownership structure of its event management arm amid Covid-19-caused cancellations.

Donghao Lansheng's sporting goods and office supplies trading unit Shanghai Lansheng Corp. will take over DLG Exhibition & Events Group in a deal worth CNY1.5 billion (USD206.5 million), the Shanghai-based parent, which has also invested in the China International Import Expo, said in a statement on March 6.

The move will improve the company's cash flow and pave the way for more mergers and acquisitions in the future, Chen Huifeng, president of the target firm told Yicai Global in an exclusive interview. China's exhibition management sector doesn't have a high concentration ratio whereas international firms try to integrate more, Chen added.

The buyer will cover the cost by transferring 51 percent of its industrial lighting unit Lansheng Light Industrial Products Import & Export's equity to the parent, as well as by issuing new shares and paying in cash. 

The merger is not the only thing to shake up DLG Exhibition & Events this year. "The Covid-19 epidemic will definitely affect the exhibition sector's performance in the first half," said Chen. However, despite cancelations and delays, the long-term trend should remain unchanged, he added.

DLG Exhibition & Events organizes major business and sports functions in China such as the World Artificial Intelligence Conference, China Shanghai International Technology Fair, and the Shanghai International Marathon.

Editor: Emmi Laine