(Yicai) Dec. 19 -- Haoxiangni Health Food and Yanker Shop Food are investing a combined CNY1.1 billion (USD154 million) in leading snack chain operator Lingshi Henmang, which has just merged with a close rival, as China’s nibbles makers join forces to better withstand competition.

Haoxiangni Health is pumping CNY700 million (USD98 million) into Lingshi Henmang for a 6.6 percent stake and Yanker is injecting CNY350 million (USD49 million) for 3.3 percent equity, according to the deal signed by the three parties yesterday.

The funds raised will be mainly used to construct warehouses, develop new products, digitize operations, market development and brand building, said Yan Zhou, chairman of Changsha-based Lingshi Henmang.

Last month, Lingshi Henmang merged with another leading titbit chain Zhao Yiming Lingshi, boosting the number of its outlets to over 6,500 and making it a heavyweight in the sector. 

Lingshi Henmang and Zhao Yiming Lingshi are increasing their market shares rapidly with more competitive prices while supermarkets are struggling amid changed retail habits, Haoxiangni said in a statement yesterday.

The investment will allow Haoxiangni Health, which mainly makes red date nibbles, to leverage Lingshi Henmang’s huge sales network to boost sales, the Zhengzhou-based company added.

Haoxiangni Health, which was founded in 1992, saw its losses narrow 24 percent in the first nine months from a year earlier to CNY40.8 million (USD5.7 million), while revenue soared 12 percent to CNY1.1 billion (USD154.3 million).

Set up in 2005, Yanker’s net profit in the first three quarters surged 81 percent from a year earlier to CNY396 million (USD55.5 million), and revenue soared 53 percent to CNY3 billion (USD420 million).

Editor: Kim Taylor