CHINA: China Water and Drinks acquires bottled water company
China Water and Drinks (CWDK) has acquired Pilpol (HK) Biological, which owns and operates Nanning Taoda Drink Company. The acquisition has been made through CWDK subsidiary Fine Lake.
Fine Lake will pay an estimated U$11.8m consideration for the acquisition of Pilpol, of which $5.9m will be paid in cash and the balance will be paid in restricted stock of CWDK.
However, if Pilpol's net income for 2006 is less than $2.9m, the total consideration payable by Fine Lake will be reduced to an amount equal to four times the audited net income of Pilpol.
Pilpol owns and operates Nanning Taoda Drink Company, which is a bottled water production company located in Nanning City, Guangxi Province in China. It currently operates two production lines with a capacity of 160m litres of bottled water per year.
The cash portion of the purchase consideration shall be paid within 15 business days after the issuance of Pilpol's 2006 audited financial statements. The stock portion of the purchase consideration shall be paid on the 90th day after the effective date of CWDK's registration statement for the shares issued in CWDK's recently consummated US$30m private placement.
Xing Hua Chen, CEO of CWDK, said: "We are excited about the acquisition of Pilpol because it will expand our market penetration in the Guangxi Province, which has a population of 50m. We believe that our presence in Guangxi will serve as a stepping stone for our products to penetrate the Guizhou, Sichuan and Yuannan Provinces. It is our belief that the acquisition of Pilpol will improve our production capacity and our bottom line. It is the intent of CWDK to continue to look for additional acquisition opportunities."
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