January 5, 2011

Yuhe buys 10 poultry breeder farms in China

Weifang Yuhe Poultry Co Ltd, a wholly-owned subsidiary of Yuhe International, entered into a series of agreements to purchase 10 breeder farms in China's Liaoning and Henan Provinces, for an aggregate purchase price of RMB 108,686,716 (US$16.4 million).

The 10 breeder farms are purchased from six individuals engaged in large-scale parent-breeder raising businesses in China, where eight breeder farms are in Liaoning Province, and two are in Henan Province.

Pursuant to the terms of the asset purchase agreements, the acquisition consideration will be paid in combination of cash and Yuhe's stock.

Total cash consideration amounts to RMB80,098,406 (US$12 million). The share consideration is set at a price of US$10 per share with total share consideration around RMB28.6 million (US$4.3 million), for approximately 431,848 restricted shares of Yuhe's common stock.

The restricted shares are subject to a six-month lock-up period. Upon closing, Yuhe will have an increased production capacity of 3.15 million sets of parent breeders, accounting for 8% of China's broiler market in terms of production capacity.