AgFeed Acquires M2P2

GLOBAL - AgFeed Industries, Inc. has announced detials of its acquisition of M2P2 LLC and approval of a stock repurchase programme.
calendar icon 16 August 2010
clock icon 4 minute read

AgFeed Industries Inc., a US company and one of the largest independent hog production and animal nutrient companies in China, has announced that it has agreed to definitive terms for the acquisition of the operations and assets of M2P2 LLC based in Ames, Iowa. AgFeed and M2P2 have entered into a binding term sheet summarising the principle terms of the acquisition and expect to complete the transaction later this month. M2P2 is a leading US hog production company, having set standards of excellence in innovation, productivity and efficiency in pork production. M2P2 is a joint venture partner with AgFeed in AgFeed International Protein Technology Corp.

None of M2P2's operations or facilities has been affected in any way by the recent flooding in Ames, Iowa.

Dr Songyan Li, AgFeed's Chairman, said: "We are very pleased with the progress we have made to move this transaction forward and expect to move rapidly to complete the acquisition. The transaction has developed during the last weeks to allow us to purchase not only M2P2's operations, but also its farm and real estate assets. We expect that M2P2's base of hog production will add approximately $180 million of revenue to our company and provide a solid platform to pursue growth opportunities."

The aggregate consideration AgFeed expects to pay to acquire M2P2 is US$26 million, subject to adjustment based upon the book value of M2P2's assets, of which approximately 49 per cent will be paid in cash and approximately 12 per cent in AgFeed common stock with the balance being in the form of a 10-year seller note. The completion of the transaction is subject to a number of conditions including the finalization of due diligence, negotiations and execution of definitive agreements and board approvals. It is anticipated that John Stadler, Chairman of M2P2 will join AgFeed's Board of Directors upon completion of the transaction.

Additionally, AgFeed has authorised a share buy-back programme for up to $5 million of its common stock. Any shares of common stock repurchased under the program will be returned to treasury. Under the terms of the repurchase program, the Company may repurchase shares in open market purchases or through private negotiated transactions. The timing, volume and nature of share repurchases will be at the sole discretion of management, dependent on market conditions, other priorities for cash investment, applicable securities laws, and other factors, and may be suspended or discontinued at any time. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which would allow repurchases under pre-set terms at times when the Company might otherwise be prevented from doing so under insider trading laws or because of self-imposed blackout periods.

Headquartered in Ames, Iowa, M2P2 was formed in 2003 by merging together seven separate business entities, all of which were involved in the swine production business. This union merged expertise in all phases of hog production into one company. M2P2 has become one of the premier swine production companies in the United States. With sow operations in Colorado, Oklahoma and North Carolina, and finishing operations centered in Iowa, M2P2 will produce 1.3 million pigs annually. M2P2's unparalleled pursuit of perfection and commitment to continuous operating improvements allows M2P2 to deliver quality pork to strategic partners.

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