Urban Tea, a retailer of speciality teas in China, has entered into a letter of intent (LoI) to buy a controlling interest in Chuangyeying Brand Management (CYY) and Store Master Food Trading.

Both, CYY and Store Master are commonly owned by five individuals.

The speciality retailer signed the non-binding LOI along with its subsidiary Hunan Ming Yun Tang.

Under the agreement, Hunan Ming will purchase 51% of each of the two companies’ equity.

CYY operates more than 300 tea beverages franchises, while Store Master has expertise in supply chain management, product research and development.

Additionally, Store Master has a scalable warehouse with an advanced logistics management system.

Financial details of the deal remain undivulged.

Urban Tea chief financial officer Kan Lu said: “If definitive agreements are executed as planned, Ming Yun Tang will have control over more than 300 franchisees along with a more complete supply chain system, stronger R&D capability, and more expansive marketing channels in China upon completion of the acquisitions.”

If the deal materialises, then it would combine the resources and expertise of Ming Yun Tang, CYY, and Store Master.

CYY founder Chen Min said: “I am delighted to enter into this LOI with Hunan Ming Yun Tang. The planned acquisition will leverage our combined expertise and resources to accelerate our business development to the next level.”

Completion of the deal is subject to due diligence investigations by Ming Yun Tang and execution of the definitive agreement in addition to the satisfaction of other customary closing conditions.

In a separate development, last year Urban Tea acquired a 51% stake in Hunan 39 PU Tea.