(Yicai) Dec. 16 -- Wens Foodstuff Group, one of China’s largest pig breeders, said over the weekend that it will spend CNY1.61 billion (USD221 million) to acquire a majority stake in a environmental protection business linked to one of its directors.

Wens Foodstuff will buy about 91.4 percent of Juncheng Herui Environment Group, financing the deal through the proceeds of completed bond sales, the Yunfu-based company announced late on Dec. 13.

Juncheng Herui is engaged in pollution control in agriculture and animal husbandry. Wen Pengcheng, a director at Wens, is its chairman and owns a controlling stake. Several members of Wen’s family also directly or indirectly hold shares in it.

Shares of Wens Foodstuff  (SHE: 300498) closed down 1.6 percent at CNY17.17 (USD2.36) each in Shenzhen today.

Earlier this year, Juncheng Herui applied to list on Shenzhen’s tech-heavy ChiNext board, hoping to raise more than CNY500 million (USD68.7 million). But the filing was pulled after the stock exchange raised concerns about the firm's related-party transactions, independence, and close ties with Wens Foodstuffs, especially regarding major customers.

The bourse also pointed out that between 2014, when the firm was set up, and 2022, 

Juncheng Herui had a history of shareholders transferring its shares for CNY0 each.

Wens Foodstuffs said the acquisition is in line with its strategy and future development plans, as it will be conducive to integrating resources, giving full play to synergies, and enhancing competitiveness in the field of agricultural environmental protection.

Last year and in the first six months of this year, Juncheng Herui had operating income of CNY1.16 billion and CNY464 million, respectively, while net profit came in at CNY92.2 million (USD12.7 million) and CNY19.61 million (USD2.7 million).

Editor: Tom Litting