Zhongpin Acquires Processing Facility in Sichuan Province
The acquisition expands Zhongpin's presence in Sichuan Province, which is the largest hog producing province in China. In addition, the hogs in Sichuan Province have relatively low feeding costs, which will reduce Zhongpin's raw materials costs.
05/07/07 Zhongpin Inc., a leading meat and food processing company in the People's Republic of China, announced that it has substantially acquired all of the assets of Deyang East China Food Company Limited, including a chilled and frozen pork processing facility located in Cangshan County, Sichuan Province. Zhongpin paid $6.6 million in cash in the transaction, which closed on June 29, 2007.
Prior to the acquisition, Deyang was one of Zhongpin's OEM partners. As a result, the processing facility acquired by Zhongpin, which has an annual processing capacity of 45,000 metric tons of chilled and frozen pork, already meets Zhongpin's high production and product quality standards for processing premium pork products. Approximately 50% of the production capacity of the acquired facility will be dedicated to the production of chilled pork and 50% to the production of frozen pork. The acquisition expands Zhongpin's presence in Sichuan Province, which is the largest hog producing province in China. In addition, the hogs in Sichuan Province have relatively low feeding costs, which will reduce Zhongpin's raw materials costs.
"We believe our acquisition of Deyang's assets provides us a great opportunity to expand into the southwest region of China. The processing facility we purchased has established top processing standards for premium quality pork and is located near both an abundant source of hogs and the main railways and highways in Sichuan Province for easy access to rapid distribution," said Mr. Xianfu Zhu, CEO of Zhongpin, Inc. "We will sell our products produced by this facility in Sichuan Province, Chongqing City and Southern China."
