Oriental Rise Bets Big on Upstream Control with Daguan Tea Acquisition Bid

NINGDE, China – December 30, 2025 – In a strategic move signaling a major push for consolidation and supply chain security, NASDAQ-listed Oriental Rise Holdings Limited (ORIS) announced today it has signed a non-binding letter of intent (LOI) to acquire a controlling stake in Hubei Daguan Tea Industry Group Co., Ltd.

The proposed acquisition of the Hubei-based tea producer and processor sent an immediate jolt of optimism through the market, with Oriental Rise's stock surging in after-hours trading. The move is widely seen as a decisive step by the integrated tea supplier to fortify its position in China's vast and competitive tea industry by gaining direct control over critical upstream resources.

A Strategic Brew for Market Control

For Oriental Rise, a company that has built its business on a vertically integrated model of cultivating, processing, and selling white and black teas from its gardens in Fujian Province, the acquisition represents a significant deepening of its core strategy. The company has recently faced considerable headwinds, reporting a sharp decline in revenue and profit for the first half of 2025, which it attributed to falling white tea prices, an economic slowdown, and market oversupply. The gross margin fell from 35% to a concerning 18%.

Against this challenging backdrop, the bid for Daguan Tea appears to be a calculated offensive. The deal aims to address fundamental vulnerabilities by securing raw material sources and large-scale production capacity. This is expected to stabilize costs, enhance quality control, and ultimately improve profitability.

“We believe that securing upstream resources and production capacity is fundamental to improving long-term competitiveness and earnings quality in the tea industry,” said Mr. Dezhi Liu, Chief Executive Officer of Oriental Rise, in a statement accompanying the announcement. “Daguan Tea has built a solid foundation in tea plantation resources, scalable production, and product development.”

By integrating Daguan Tea's substantial self-owned and managed tea plantations and modern processing facilities, Oriental Rise hopes to achieve greater supply chain stability and operating leverage. This control over the initial stages of tea production is crucial in an agricultural sector susceptible to price volatility and quality inconsistencies.

From Plantation to Premium Cup

The synergy between the two companies extends beyond mere operational control. The acquisition is poised to significantly enhance Oriental Rise's product mix and its capacity to compete in the lucrative premium tea segment. Daguan Tea is an established enterprise with a diverse portfolio that includes premium offerings like “Daguan Peony King” white tea and “Daguan Oolong Tea,” alongside bulk and export-grade teas. This broad capability complements Oriental Rise's existing focus on white and black teas.

Integrating Daguan’s assets could allow Oriental Rise to pivot more aggressively towards higher-margin products, a necessary move given its recent margin compression. Furthermore, Daguan Tea’s established export channels present a major opportunity. By combining these channels with its own public company platform and capital market access, Oriental Rise could accelerate its expansion into international markets, which are increasingly receptive to high-quality, traceable Chinese teas.

This strategy aligns perfectly with broader consumer trends in China and globally. There is a growing demand for premium, health-conscious beverages with clear provenance. By controlling the entire value chain—from the tea bush in Hubei to the final packaged product—Oriental Rise can build a powerful brand narrative centered on quality, authenticity, and sustainability that resonates with modern consumers.

Navigating Risks and Investor Optimism

Despite the clear strategic rationale, the path to finalizing the deal is not without its hurdles. The letter of intent is non-binding, and the transaction's completion hinges on comprehensive due diligence, the negotiation of definitive agreements, and navigating China's complex regulatory landscape. Mergers and acquisitions in the agricultural sector can attract scrutiny related to land use, environmental standards, and anti-trust rules.

However, investor sentiment is decidedly bullish. The market's reaction, with Oriental Rise's stock climbing nearly 38% in premarket trading following the news, underscores a strong belief in the deal's potential. This positive response is particularly notable when contrasted with a previous announcement in July 2025, where an LOI to acquire two tea distributors was met with a 5% stock decline. Investors, it seems, place a higher value on acquiring hard assets and upstream production capabilities than on expanding distribution alone.

The stock surge also provides a timely solution to another pressing concern. Oriental Rise had been facing a potential delisting from Nasdaq after its stock traded below the $1.00 minimum bid price for over 30 consecutive days. The enthusiasm for the Daguan Tea deal propelled the stock price back into compliance, providing management with crucial breathing room as it pursues this transformative acquisition.

The Bigger Picture in China's Evolving Tea Industry

This proposed acquisition is taking place within the context of China's mammoth tea market—the largest in the world, with revenues projected to exceed $133 billion by 2029. The industry is undergoing a dynamic transformation, driven by the dual forces of tradition and innovation. While younger generations are fueling a boom in new-style tea beverages, there is also a concurrent revival of interest in traditional tea culture and premium, single-origin leaves.

At the same time, the industry faces existential threats. Climate change is already impacting tea cultivation, with extreme weather events like droughts and floods threatening yields and quality. A 2023 drought, for example, reportedly reduced spring tea harvests in parts of China by 20%. In this environment, owning and managing large, stable tea plantations is not just a growth strategy but a critical defensive measure.

If successfully completed, the acquisition of Daguan Tea would position Oriental Rise Holdings as a more formidable and resilient player. It represents a strategic bet on the enduring value of controlling the physical supply chain in an increasingly volatile world. By securing its access to raw materials and enhancing its production capabilities, Oriental Rise is not just preparing for growth but is building a foundation to weather future storms and cultivate long-term value for its shareholders.