SINGAPORE - China Kangda Food Co announced on Tuesday morning (Jan 29) that its biggest shareholder China Tian Yuan Manganese has entered into a memorandum of understanding (MOU) to negotiate a sale of shares to an unrelated third party.

If the sale goes through, the unnamed purchaser and parties acting in concert are expected to hold more than 50 per cent of the company's issued share capital, which would trigger a mandatory unconditional general offer for the rest of the company's shares under Hong Kong's takeover rules.

China Tian Yuan Manganese currently holds a 69.46 per cent stake in China Kangda, a dual-listed company in Hong Kong and Singapore that breeds and sells livestock, poultry and rabbits.

The exact number of shares to be purchased and the amount payable will be set out in a later formal agreement, said China Kangda.

Meanwhile, the potential purchaser has agreed to pay a deposit of HK$40 million (S$6.9 million) by way of cashier's order to an escrow agent within two business days from the date of the MOU. The MOU is not legally binding and will terminate if the deposit is not delivered within the prescribed period.

"As at the date of this announcement, no formal agreement has been entered into in respect of the possible transfer and the negotiations are still in progress and the possible transfer may or may not proceed," said the company.

There were no trades in shares of China Kangda on the Singapore Exchange as at 9.36am on Tuesday after the deal was announced. The counter last traded at 7.6 cents on Jan 23, according to data from ShareInvestor.com.