Shennong Group chairman keeps control in 2.38 billion yuan divorce

Shennong Group chairman He Zuxun will hand 30% of his shares, worth about 2.38 billion yuan, to his ex-wife Luo Wanyu under a court-mediated divorce, while keeping control of the pig-farming company.

The settlement, disclosed in a filing on the evening of Oct. 12, puts Yunnan Shennong Agricultural Industry Group Co. Ltd. — known in the industry as the "Yunnan pig king" — alongside the expensive divorce cases that have unsettled A-share controlling shareholders in recent years. The size of the transfer, and the speed with which it was agreed, show how far Chinese regulators now reach into family breakups at listed companies.

He will transfer 78.305 million shares, or 30% of his 261 million shares, to Luo. At that day's close the stake was worth about 2.38 billion yuan (about $336 million). The two also signed an acting-in-concert agreement, and Shennong said control of the listed company is unchanged.

A family bloc holding more than 86%

Yunnan Shennong was founded in 1999 with registered capital of about 526 million yuan (about $74 million), according to Tianyancha, a corporate records database.

As of the end of June 2026, He Zuxun held 49.74%. His siblings He Qiaoguan held 11.48%, while He Yuebin and He Baojian held 7.65% each. The family's core holding vehicle, Yunnan Zhengdao Venture Capital Partnership (LP), held a further 10.03%.

Together with an employee partnership platform, the four siblings had built a closed bloc of more than 86% — an unusually tight grip even by the standards of family-run Chinese agribusinesses.

Why the split was set at 30%

Carving out 30% rather than half, and pairing it with a voting agreement, looks designed to protect control.

In earlier A-share cases, an even split of shares has ended controlling shareholders' absolute say or triggered stampedes of selling. Here, He's direct stake falls only from 49.74% to about 34.8%, leaving him the largest single shareholder. Adding the holdings of He Qiaoguan, He Yuebin and other family concert parties keeps the family's combined grip well above a safe line.

Under the acting-in-concert agreement, Luo attaches the voting and proposal rights of her shares to He unconditionally. She cannot put forward any motion without his consent — closing off, at the level of securities law and exchange rules, the risk that a property split destabilises the company's governance.

Regulators closed the "fake divorce, real selldown" route

The mediation was concluded less than three weeks after the case was filed. One reason is regulatory.

The CSRC has brought divorce-related share transfers by major shareholders under its rules on stake reductions. Whatever the marital outcome, the transferring and receiving parties must combine their quotas, pace of selling and disclosures, and jointly follow the rules for major shareholders.

For Luo, that means her 78.305 million shares — nearly 15% of the company and close to 2.4 billion yuan in value — cannot simply be dumped on the secondary market. Signing the voting pact and locking in compliance commitments was the price of a clean transfer of title that would not draw regulatory questions.

The business case for a fast deal

The deeper pressure is industrial. Hog farming is asset-heavy and highly indebted, and it swings violently with the hog cycle.

Shennong sits in the industry's top tier on cost control thanks to its integrated breeding operations. But the whole sector has spent two years in difficult territory, and sow capacity expansion and cold-chain slaughtering plans depend heavily on liquidity and bank credit lines.

A drawn-out property lawsuit that froze the chairman's shares would have raised the risk of lenders pulling or cutting credit, and of a downgrade. Settling quickly and confirming the transfer through a civil mediation document let He preserve the listed company's credit standing at the cost of giving up part of his ownership — stability for the business as the industry consolidates.

What the agreement cannot lock up

The pact binds voting intent, not interests. Over time, termination clauses — an expiry, a change in terms, or a change in a party's health or legal capacity — could take effect.

Luo would then be an outside individual holder of nearly 15%, a position whose role inside a family-controlled company would be delicate. If family interests diverge, the prospect of share pledges, inheritance or sales in trading windows would keep pressure on the stock and dilute the register.

Control held, but the main business is the test

He Zuxun has paid close to 2.4 billion yuan in stock for a smooth end to his marriage and has defended the last line of control in the voting agreement.

After the transfer is registered, the question for minority investors is whether management can turn its full attention back to the main business — squeezing costs further and generating cash as the hog cycle recovers.