Top restaurant to be environmental friendly

Xiang E Qing, a top restaurant in China, plans to purchase 51 percent of an environment technology company in Jiangsu province, the restaurant said in a statement.

Specialists said this indicates a strategy of diversification for the restaurant company.

The restaurant has forecast losses of 160 million yuan ($26 million) to 240 million yuan in the first half of this year due to the crackdown on extravagant banquets.

Xiang E Qing signed a letter of intent with the company, Jiangsu Zhongyu Environment Technology Co Ltd, for the stock purchase on July 25, and will pay 50 million yuan to the company as front money within five working days after the agreement took effect. The funds come from the restaurant's own capital.

It marks the company's first venture into the green industry as well as its initial attempt in cross-industry merger and acquisition, according to the restaurant. However, it has also shown concerns on the potential risks in the new field due to its lack of experience.

Zhongyu has registered capital of 204 million yuan, covering areas including the treatment of waste water, gas and solids, research and development, material and medicine, as well as consulting work.

Industry specialists told National Business Daily that the purchase displayed the restaurant's efforts to diversify amid the ongoing restaurant downturn.