AgFeed Industries: Definitive terms for acquisition of M2P2 LLC

AgFeed and M2P2 have entered into a binding term sheet summarizing the principle terms of the acquisition and expect to complete the transaction later this month. M2P2 is a leading U.S. 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. (“AFIPT”).

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

Dr. Songyan Li, AgFeed’s Chairman, stated, “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.”

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The aggregate consideration AgFeed expects to pay to acquire M2P2 is $26 million, subject to adjustment based upon the book value of M2P2’s assets, of which approximately 49% will be paid in cash and approximately 12% 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.

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Additionally, AgFeed has authorized a share buy back program 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.

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