July 21, 2010

 

AgFeed to buy US hog producer M2P2

AgFeed Industries Inc., a China-based pork and animal feed producer, said Tuesday (Jul 20) it agreed to acquire US hog production company M2P2 LLC for US$16 million in cash and stock.

 

M2P2, based in Ames, Iowa, teamed up with AgFeed last May to establish a management company in Asia, AgFeed International Protein Technology Corp., which is focused on introducing the Western model of pork production to China and Asia. With sow operations in Colorado, Oklahoma, and North Carolina, and finishing operations centred in Iowa, M2P2 produces 1.3 million pigs annually.

 

AgFeed, a US company with its primary operations in China, plans to acquire M2P2 for 80% cash and 20% AgFeed stock. The company said it expects M2P2 Chairman John Stadler will join AgFeed's board when the deal is completed.

 

AgFeed is one of the largest independent hog production and animal nutrient companies in China, where there is a sizable market for pork. Earlier this year it announced plans to invest in a hog production project in the Jiangxi province to build five Western model hog farms.

 

The complex will have annual production capacity of up to 600,000 hogs when completed during 2012. AgFeed has also said it plans to sell 20% of its animal nutrients feed unit in a stock offering as it focuses more on compound and concentrated feed markets, which make up most of China's current expanding production.

 

The company in May reported a 58% jump in first-quarter revenue to US$52.9 million as production volumes in its hog division rose 24%.

 

US-listed shares of AgFeed rose 13 cents to US$3.03 in morning trading.