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AgFeed: Acquisition of 2 Commercial Hog Farms

by 5m Editor
22 September 2008, at 8:29am

CHINA - AgFeed Industries, Inc. today announced that the company has come upon agreements to acquire two large producing commercial hog farms located in South China.

AgFeed anticipates these acquisitions to close in October and to be funded with the Company's available cash on hand. The Company will have a total of 30 producing commercial hog farms upon completion of these acquisitions.

Raising 2008 Earnings Guidance

AgFeed raises its 2008 earnings guidance of adjusted earnings per share (EPS) to $1.10, due to the projected financial performance for the 3rd and 4th quarter of 2008, which would include the completion of these two additional acquisitions. In addition, AgFeed is in discussions with multiple other hog farms as potential acquisition targets. All of AgFeed's acquired hog farms are immediately accretive to earnings.

Declining Feed Input Costs Benefit AgFeed

China's domestic corn and soy meal production for 2008 are expected to reach record highs due to a great harvest season. Since corn and soybean meal represent the majority of costs in hog production, AgFeed currently benefits from declining feed input costs and expanded profit margins.

Songyan Li, Ph.D., AgFeed's Chairman commented:" We are focused on growing our business. Integration of all of our acquired hog farms has been very well executed. The anticipated synergetic benefits derived from acquired hog farms such as increased operating efficiency; lower feed costs, better disease control measures and centralized cash/accounting management have exceeded our initial targets. We expect continued earnings growth in a favorable market environment."

AgFeed Comments on Recent Market Activities

AgFeed believes that the Company, among others in the public markets, has been victimized by rumor-spreading short sellers including naked short sellers in the Company's stock. AgFeed suspects that for months, several short sellers may have coordinated and used various anonymous ECNs (Electronic Communications Networks) to manipulate the Company's stock. AgFeed estimates that there are currently more than 3 million Company shares sold short, at an approximate average price of $10 per share. AgFeed may be a victim, like many companies in the financial sector, as outlined in recent SEC actions against short sellers. A short seller can drive the share price down simply by rapidly hitting bids, thus creating fear among investors who may then sell at a loss, because of such selling pressure. A short seller may spread false market rumors and profit by buying shares back from panicked investors at a lower price. Shareholders suffer from these manipulative activities. AgFeed is evaluating all options available to protect the best interest of its shareholders from manipulative activities.

5m Editor