Deyu Agriculture Enters Into Agreements to Expand Its Product Lines
BEIJING, Nov. 17, 2010 /PRNewswire-FirstCall/ — Deyu Agriculture Corp. (OTC Bulletin Board: DEYU), a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, announced today that it has entered into a series of control agreements with the majority equity owners of Deyufarm Innovation Food (Beijing) Co., Ltd. (“Deyufarm”), a manufacturer of instant organic multi-grain packaged food in China.
Deyufarm, through its wholly owned subsidiary, Sichuan Haoliangxin Instant Food Co., Ltd, (“HaoLiangXin”) is engaged in the research & development and production of instant grain foods and has production facilities in Chengdu, Sichuan Province. HaoLiangXin has significant proprietary technical expertise in manufacturing grain based instant noodles, which is a challenging process given the need for consistent, high quality product. Instant grain food products require access to high quality grains which Deyu will provide through its network of farmers and its company controlled farm acreage. Deyu and HaoLiangXin will produce and distribute a wide range of branded instant organic grain products including instant grain noodles, ready-to-eat grain rice, instant grain drinks and instant grain soups. HaoLiangXin is in the midst of a major capital expansion plan that will increase its production capacity to over 300 million units per year by mid 2011, including adding production facilities in Beijing.
“As Chinese consumers are becoming increasingly health and nutrition conscious, the demand for high quality organic grain food is growing rapidly,” said Mr. Jianming Hao, Chairman and Chief Executive Officer of Deyu Agriculture. “We believe this represents a tremendous growth opportunity for Deyu. It furthers our strategy of adding higher value-added, higher margin, branded processed foods to our product portfolio and enhances our grain products processing operations. Additionally, it leverages our existing brand awareness and our strong nationwide distribution network and customer base of over 8,500 retail stores, including the Shanxi Greenwood Supermarket Group, Auchan, Walmart and Carrefour. We believe this relationship with HaoLiangXin will significantly accelerate Deyu’s revenue growth in the coming years as the instant grain food market is rapidly expanding.”
Under the terms of the agreements, Deyu will receive 64.3% of the net profits of Deyufarm in exchange for assisting HaoLiangXin in the sales, marketing and distribution of its products into Deyu’s nationwide distribution network and customer base. Deyufarm will initially be capitalized with RMB 70 million (approximately $10.4 million USD), including RMB 25 million (approximately $3.7 million) from SBCVC Fund III, a venture capital fund that is managed by SB China Venture Capital, a highly reputable and leading venture capital firm which invests in early stage growth companies in China.
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in the Shanxi Province of the People’s Republic of China. Deyu has access to over 100,000 acres of farmland in the Shanxi Province for breeding, cultivating, processing, warehousing, and distributing grain and corn products. Deyu has an extensive retail distribution network of more than 8,500 retail stores across China.
Deyu Agriculture’s web site is located at www.china-deyu.com.
About SB China Venture Capital
SB China Venture Capital is a leading venture capital firm in China that invests in various industries, including information technologies, healthcare, new materials, consumer, retail and food packaging. The firm targets investments in high potential companies in early, expansion, and pre-IPO stages. Investment portfolio companies include Alibaba, Taobao, Focus Media and Precise.
Safe Harbor Statements
This press release contains forward-looking statements made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon the current plans, estimates and projections of Deyu Agriculture’s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company’s ability to maintain its competitive position. Additional Information regarding risks can be found in the Company’s Quarterly Report on Form 10-Q and in the Company’s recently filed Prospectus filed pursuant to Rule 424(b)(3) with the SEC.
SOURCE Deyu Agriculture Corp.