China's Tianli Agritech acquiring hog facility
December 16, 2010
by Meat&Poultry Staff
WUHAN CITY, China – Tianli Agritech Inc., a leading producer of breeder hogs and market hogs based in Wuhan City, China, has entered into an agreement to purchase the assets of Hengdian Farm, a 20,000 head annual production capacity hog farm located in Wuhan City, China and owned by Wuhan Taida Breeding Co. Ltd.The agreement calls for payment of approximately $1.4 to $1.6 million to the seller to be finalized upon the transfer of equipment. The company expects to close the transaction by the end of December.
"We are very excited about this acquisition, which will become our tenth farm," said Hanying Li, Tianli's chairwoman and CEO. "We identified this farm as an acquisition candidate in September and upon making a $400,000 deposit, our team began an extensive due diligence process. We have acquired and integrated multiple farms over the past four years, and we are confident in our ability to successfully equip this farm to produce the high quality breeding and market hog stock for which Tianli is well known.”
“While this farm will have a minimal impact on the company's 2011 financials, once it reaches full operating capacity in 2012, it will generate annual revenue of approximately $4.5 million at current market prices, with a targeted operating margin of approximately $1.8 million," she added.
Hengdian Farm is located in Wuhan City. The facilities are in good condition as the farm was constructed in 2008 and only operated for a few months after completion. The company will acquire the rights to 462 acres of land, 30 buildings and a variety of associated equipment. Tianli plans to invest approximately $500,000 to upgrade the farm's facilities and transfer its breeding stock to the Hengdian Farm.