Asian Citrus has revealed the collapse of a ground-breaking deal under which it would have acquired more than six square kilometres of Chinese citrus groves, and increased its tree numbers by one-third.

The London-listed orange fruit and juice group said that, a year after unveiling the potential purchase of a state-owned citrus operation in southern China, it had not sealed "any legally binding formal agreement" by an end-of-April deadline, nullifying an outline deal agreement.

"They [Asian Citrus] have broken off talks," a person familiar with the company told Agrimoney.com.

The failure denies Asian Citrus the chance, in one swoop, to lift its citrus trees by 1.1m, and its land holdings by 6.7 square kilometres, through an acquisition which the company said would "provide immediate revenue and profit".

It also represents the end of a deal which it is believed would have set a landmark in passing to private hands, on a lease for about 50-years, state-owned agricultural land.

The acquisition target, the Guangxi Lixin Farm in Guangxi Zhuang, is a state-owned enterprise.

Red tape 

"A government selling agricultural land anywhere is a pretty sensitive thing anyway, but when you are talking about China, you can times that by 100," the person said.

Indeed, the failure of the deal was viewed as unsurprising by Seymour Pierce analyst Sue Munden.

"The acquisition, as the first 'privatisation' of a state owned farm, has been subject to heavy bureaucracy so that a transaction, which was announced a year ago, has still not received the necessary approvals," Ms Munden said, restating a "buy" rating on Asian Citrus shares and a target price of 90p.

China, with 40% of the world's farmers but only 9% of its farmland, has been an enthusiastic buyer of land abroad, notably in South America.

Beidahuang Land Cultivation, a China-based land purchase group, said in March that it alone planned to acquire 200,000 hectares of farmland overseas this year, naming Latin America and South East Asia as likely areas.

Other options? 

Asian Citrus, which said it was "actively seeking other potential investment opportunities" in China, closed down 1.7% at 71.50p in London.

Ms Munden said that the company, after buying a juice company last year, "need not be restricted to orange or citrus plantations" for takeovers.

"Asian Citrus would consider other tropical fruit estates, given that fruit could be used as a source for concentrate as well as sold fresh," she said.