September 9, 2008
China''s Sunwin International Neutraceuticals, Inc, a producer of Chinese herbs and veterinary medicines based in Qufu, Shandong, announced last week it is acquiring 60-percent of Qufu Shengwang Stevia Biology and Science Co., Ltd. ("Qufu Shengwang") from Shandong Shengwang Group Co., Ltd.
Sunwin would be buying the stake through its subsidiary Qufu Natural Green Engineering Co., Ltd. The parties had come into an agreement in June but announced an amendment last week.
Sunwinwould be acquiring its stake for US$6.2 million through a stock exchange. The purchase price was based on the net tangible book value of Qufu Shengwang as set forth in its financial statements as of April 30, 2008 which were audited in accordance with Generally Accepted Accounting Principles in the United States.
Shares of Sunwin issued were based on a twenty-day moving average of Sunwin''s common stock ending on August 29, 2008.
As part of the amended transaction, the parties have entered into a "make good" agreement in which Shengwang agreed to return to Sunwin International a prorata number of the shares it acquired as part of this transaction in the event that Qufu Shengwang does not earn a minimum of US$5 million in net income over a period of 36 consecutive months after completion of the acquisition.
Management of Sunwin International estimates that Qufu Shengwang has the current capacity to generate approximately US$15 million in sales annually and yield a 20-percent to 30-percent net profit margin.
Qufu Shengwang was founded with its South Korean partner, Korea Stevia Co., Ltd. and Shengwang Group Corp. in June 2007. The company''s chief products are animal feed, agricultural organic fertilizers and bio fertilizers produced from the residue of stevia stock leaves.
According to Sunwin, stevia-based fertilizers and animal feeds are produced at a low cost but yields high nutrient value for soil, higher fructose levels and has a proven ability to breakdown harmful chemicals for plants.
Ms. Dongdong Lin, Sunwin International CEO, said Qufu Shengwang is a natural fit for the company as it uses stevia residue to make organic bio-fertilizer and organic animal feeds.
The company''s products are sold into many of the same end markets as Sunwin''s current line of veterinary feeds and medicines, she added.
Sunwin International Neutraceuticals engages in the areas of essential traditional Chinese medicine, zero calorie natural sweeteners (stevia), and veterinary medicines and feeds prepared from 100 percent organic herbal ingredients.