China’s Baotou Huazi Industry Co said it had ditched a plan to acquire a controlling stake in Huaxia Life Insurance, sending the shares of the edible sugar product manufacturer down by 8 percent in Shanghai.
Baotou Huazi, controlled by missing billionaire Xiao Jianhua’s Tomorrow Holding, said late Tuesday that the plan was off because of changes in China’s securities market, financing environment and regulatory policies. It did not elaborate.
A day earlier, a Shenzhen-listed real estate developer, Zhongtian Financial Group Co, said it planned to acquire a stake of between 21 percent and 25 percent in Huaxia for as much as 31 billion yuan ($4.7 billion).
Tomorrow already has a stake in Huaxia, though the size of the holding is unclear. It is also unclear if Tomorrow is a direct or indirect stakeholder. Baotou Huazi’s stake investment would have increased Tomorrow’s share in Huaxia indirectly.
Baotou Huazi, which also produces electronic components, said in September 2015 that it had planned to acquire up to 51 percent of unlisted Huaxia for 31.7 billion yuan.
In July, sources told Reuters that Tomorrow was planning to pare back its sprawling asset portfolio.
That coincided with speculation that Xiao had been caught up in the government’s crackdown on corruption. The tycoon has been missing since January.
Baotou Huazi’s withdrawal of its interest in Huaxia comes a week after the banking regulator published draft rules that would increase government scrutiny over the ties between banks and their shareholders.
The rules were the latest in a slew of measures taken by Beijing to curb potential risks to China’s financial system.
Shares in Baotou Huazi last traded at 9.220 yuan in Shanghai on Wednesday, down 7.98 percent.