BAOTOU Huazi Industry Co. said it had ditched a plan to acquire a controlling stake in Huaxia Life Insurance, sending the shares of the edible sugar product manufacturer down sharply in Shanghai yesterday.

Baotou Huazi, controlled by missing billionaire Xiao Jianhua’s Tomorrow Holding, said late Tuesday that the plan was off because of changes in China’s securities market, financing environment and regulatory policies. It did not elaborate.

A day earlier, a Shenzhen-listed real estate developer, Zhongtian Financial Group Co., said it planned to acquire a stake of between 21 percent and 25 percent in Huaxia Life for as much as 31 billion yuan (US$4.7 billion).

Tomorrow Holding already has a stake in Huaxia Life, though the size of the holding is unclear. It is also unclear if Tomorrow Holding is a direct or indirect stakeholder. Baotou Huazi’s stake investment would have boosted Tomorrow Holding’s share in Huaxia Life indirectly.

Baotou Huazi, which also produces electronic components, said in September 2015 that it had planned to acquire up to 51 percent of unlisted Huaxia Life for 31.7 billion yuan.

In July, sources said that Tomorrow Holding was planning to pare back its sprawling asset portfolio.

Baotou Huazi’s withdrawal of its interest in Huaxia Life comes a week after the banking regulator published draft rules that would increase government scrutiny over the ties between banks and their shareholders. (SD-Agencies)