American Dairy, Royal Numico reach asset acquisition agreement

Heilongjiang Feihe Dairy Industry Co., Ltd, a subsidiary of American Dairy, to purchase Royal Numico’s milk powder processing plant and equipment in China.

10/06/05 American Dairy, Inc., one of the leading producers and distributors of milk powder and soybean products in China, announced that the agreement reached with Royal Numico N.V. on the purchase of its milk powder processing plant and equipment in China to Heilongjiang Feihe Dairy Industry Co., Ltd. -- a subsidiary of American Dairy, Inc. -- for a total consideration of USD $7.3 million closed on Wednesday, June 8, 2005.

This milk processing plant acquisition also includes 19 raw milk collection stations.

American Dairy believes that the production capabilities of this plant will increase its daily milk powder production capacity by approximately 60%, or 270 tons of raw milk per day. The company expects to realize $7 million in sale revenues and $1.5 million in net profits from the Numico plant during FY 2005.

The asset acquisition was formally closed on Wednesday, June 8, 2005, and American Dairy took over all of the operations of the former milk powder plant of Nutricia Nutrionals Co., Ltd., a wholly owned subsidiary of Royal Numico N.V., a publicly traded company in Europe.