China Water & Drinks has entered into a deal to acquire a stake in packaging company Hutton Holdings Corporation.

The bottled water firm said yesterday (6 September) that it has entered into a stock purchase agreement with two major shareholders, to acquire a 48% stake in Hutton in exchange for US$9m and over 2m shares of China Water's common stock.

Last year, Hutton, which owns PET packaging and bottle manufacturing company Guozhu Holdings, posted unaudited revenue and net profit of $30.7m and $7.5m respectively. The Hong Kong-based unit's customer portfolio includes Coca-Cola, Wateson's and Danone, Wahaha and Huiyuan Juice.

CWDK CEO Xing Hua Chen said: "The acquisition of Hutton is our first step in our plan to vertically integrate our operations and secures a stable and reliable supply source. This strategic ownership will enhance our bottled water production technology, which should reduce our costs over the long-run. It is also an important milestone that will allow us to implement our aggressive acquisition plan."

As part of the transaction, CWDK will purchase an aggregate of 11m shares of Hutton's common stock and 5m shares of its preferred stock from Cai Yingren and Wu Wen.

An amendment to Hutton's articles of incorporation will increase the number of shares of common stock in the company from 50m to 150m.