Analysis of the Rumor of Jiannanchun Acquiring Shui Jing Fang: M&A Expectations and Practical Dilemmas During Industry Adjustment Period

Based on the latest market data, I will provide you with a comprehensive analysis of the rumor of Jiannanchun acquiring Shui Jing Fang.

On December 25, 2025, Shui Jing Fang’s stock price soared sharply driven by a large number of buy orders and hit the daily limit, closing at RMB 39.80 per share with a gain of 10.01%. However, Shui Jing Fang issued a clarification announcement that evening, explicitly denying the relevant acquisition matter [1]. Jiannanchun further confirmed the rumor was false through the media on January 4, 2026 [2].

Despite lacking a factual basis, the rumor still triggered severe volatility in the capital market, reflecting the collective anxiety of the current baijiu industry during its deep adjustment period. Baijiu industry analysts pointed out that the market is in desperate need of a story to hedge the sector’s anxiety, which stems from price inversion of high-end baijiu, continuous decline of industry indicators, and the long absence of demand reversal signals [3].

Shui Jing Fang is currently the only foreign-controlled baijiu enterprise on the A-share market. Diageo holds approximately 63% of Shui Jing Fang’s shares through direct and indirect means, specifically including Sichuan Shui Jing Fang Group Co., Ltd. (39.79% shareholding) and Grand Metropolitan International Holdings Limited (23.48% shareholding) [4]. Diageo’s process of taking control of Shui Jing Fang started in 2006, and after multiple acquisitions and share increases, it finally achieved full control in 2013.

Shui Jing Fang has been facing significant performance pressure recently. In Q3 2025, its net profit fell by more than 70% year-on-year, its return on equity dropped sharply, and the contribution of investment income weakened significantly [5]. In the terminal consumer market, prices of some products have loosened, and actual transaction prices have shown a downward trend.

Notably, Diageo itself is facing difficulties. Its stock price has fallen by 37% in 2025, and it is promoting asset structure adjustments globally. In mid-December 2025, the company announced the sale of its 65% stake in East African Breweries to Japan’s Asahi Group for USD 2.3 billion, aiming to reduce debt levels and optimize its balance sheet [6]. In multiple investor conference calls, Diageo directly attributed the underperformance of its Asia-Pacific region to “the weakness of its Chinese baijiu business”.

As a member of the “Mao-Wu-Jian” landscape, once on par with Moutai and Wuliangye, Jiannanchun achieved a revenue scale of RMB 16.36 billion in 2024, which is comparable to or even exceeds that of some listed second-tier baijiu enterprises [7]. However, Jiannanchun has not yet successfully listed on the capital market. Its capitalization path has been full of twists and turns: in early 2023, the baijiu industry was rumored to be included in the “prohibited category” for IPOs, and coupled with historical equity restructuring issues, the conventional IPO channel has almost been completely blocked.

A series of recent moves by Jiannanchun have attracted market attention. In September 2025, Mianzhu Municipal State-owned Assets Affairs Center obtained a 14.51% stake in Jiannanchun Group by subscribing for capital contributions, becoming the second largest shareholder. This marks the re-entry of state-owned capital into Jiannanchun after its state-owned enterprise restructuring in 2004 [8]. Meanwhile, Jiannanchun Group announced the reduction of its holdings in Huaxi Securities, expecting to recover approximately RMB 255 million in funds.

Theoretically, there is certain room for imagination in the integration of Jiannanchun and Shui Jing Fang. During the “stock game” phase of the baijiu industry, competition in the mid-to-high-end price range of RMB 300-500 is particularly fierce, and both leading Sichuan baijiu enterprises are deeply involved. If homogenized competition can be reduced through integration, it will help break inward competition and enhance the overall industry status and operational efficiency of Sichuan baijiu. Jiannanchun can make up for Shui Jing Fang’s shortcomings such as local channel execution, price system stabilization, and dealer relationship strengthening [9].

The M&A market of the baijiu industry in 2025 shows new characteristics:

1. State-owned capital-led integration becomes the mainstream
   : Cases such as Chengdu Rongjiu’s acquisition of Jiangkouchun and Xijiu’s shareholding adjustment through state-owned capital platforms outline a new integration logic of “state-owned capital + regional brands” [10]

2. Cross-border M&A faces challenges
   : After China Resources Beer took control of Jinsha Cellars for RMB 12.3 billion, its “beer-baijiu dual empowerment” strategy is facing severe tests, and Jinsha Distillery has replaced three chairmen within two years after the acquisition [11]

3. Low-price disposal of non-performing assets
   : Some enterprises divest non-performing assets through RMB 1 transfers, reflecting the survival pressure during the industry’s deep adjustment period

The rumor of Jiannanchun acquiring Shui Jing Fang will not materialize in the short term. Both parties have complex equity structures, involve multi-stakeholder interest games, face extremely high regulatory approval difficulties, and in the current baijiu industry environment, M&A cannot assume the role of a “counter-cyclical tool”.

The market frenzy triggered by this rumor reflects three deep-seated trends in the baijiu industry:

1. Accelerated industry integration but differentiated paths
   : The gradual absorption of small and medium-sized regional brands by leading enterprises will become the mainstream, and “all-inclusive” M&A between strong brands is difficult to implement

2. Narrowed capitalization paths
   : Baijiu enterprises need to return to their own operations, and solidly enhance product strength, channel strength, and brand strength, rather than relying on capital operations to solve difficulties

3. Shift in valuation logic
   : The growth logic has shifted from “story-telling” to “competing on fundamentals”. De-stocking, stabilizing price systems, and improving sales efficiency are far more decisive than M&A

For investors, they should currently pay close attention to Shui Jing Fang’s channel restoration progress and de-stocking situation, as well as Jiannanchun’s equity standardization and governance optimization process. There is no savior in the baijiu industry that can reverse the situation with a single transaction. Only by returning to value and operations can enterprises survive the cycle.

[1] Shui Jing Fang Denies Being Acquired by Jiannanchun, but Undercurrents of Baijiu M&A Integration Surge

[2] Jiannanchun Denies Rumor of Acquiring Shui Jing Fang, Both Parties Clarify Market Speculations

[3] Jiannanchun and Shui Jing Fang: Neither is the Answer for the Other

[4] Shui Jing Fang Continues to Promote Strategic Layout to Seek Breakthroughs, Stock Price Underperforms the Market This Year

[5] PR for Shui Jing Fang: It’s Not Easy!

[6] Xijiu Says It Will Stabilize Its Fundamental Market This Year; Penfolds Will Reduce Inventory in Chinese Channels

[7] Jiannanchun and Shui Jing Fang: Neither is the Answer for the Other

[8] Bottom-Fishing Entry for RMB 1: How Magical is Baijiu M&A in 2025?

[9] Jiannanchun Denies Rumor of Acquiring Shui Jing Fang, Both Parties Clarify Market Speculations

[10] Bottom-Fishing Entry for RMB 1: How Magical is Baijiu M&A in 2025?

[11] Bottom-Fishing Entry for RMB 1: How Magical is Baijiu M&A in 2025?