China Organic Agriculture, Inc. (OTC Bulletin Board: CNOA) (“China Organic Agriculture” or the “Company”), a company headquartered in the Liaoning province in China engaged in the trading and distribution of agricultural products, today announced that it has entered into an agreement to acquire 60% of the stock of Changbai Eco-Beverage Co., Ltd (“Changbai”) for RMB 70 million ($10.25 million). The closing is expected in March of 2010.
Changbai is a well known blueberry product producer and distributor located in Jilin Province of China. Changbai produces more than one hundred blueberry related products, including soft drinks, health care products and honey mixed products, meeting the increasing market demand in China for these products.
Changbai was established in May 2008 and over the next eight months it generated $4.1 million of sales and $1.1 million net income. In the first eleven months of 2009, sales revenue reached $7.1 million, with net income of $2.1 million. Changbai currently distributes its products within three provinces in northeastern China and plans to expand into other regions over the next two years. Upon completion of this acquisition, Changbai will utilize China Organic Agriculture’s countrywide sales network, and is expected that as a result of this acquisition, it will be able to expand its market more rapidly than originally anticipated, thus increasing both its brand awareness across China and its revenues.
Blueberry products have long been enjoyed in North American and European markets, and are now an emerging beverage group in China. China Organic Agriculture’s CEO, Mr. Li Jinsong, said, “We believe that the opportunities in the blueberry industry are enormous as blueberry based products will become increasingly in demand in China with the growing interest in healthy food alternatives. Changbai is well positioned to serve this market and to benefit from this growth. Now that we have an agreement, assuming the satisfactory conclusion of our financial and legal due diligence, and receipt of all necessary government approvals, China Organic Agriculture’s distribution network and broader-based relationships will enable Changbai to expand its business and more quickly penetrate this growing market with this promising beverage and product group. We look forward to working together to maximize the potential.”
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