China Water and Drinks Inc. announced today that it has completed the acquisition, through its wholly-owned subsidiary, Fine Lake International Limited, of Pilpol (HK) Biological Limited, a Hong Kong corporation.
Pilpol owns and operates Nanning Taoda Drink Company Limited, a PRC company which is a bottled water production company located in Nanning City, Guangxi Province in China. Nanning is a major bottled water supplier in Guangxi Province that currently operates two production lines with a capacity of 160 million liters of bottled water per year.
Fine Lake will pay an estimated $11,780,000 consideration for the acquisition of Pilpol, of which $5,890,000 will be paid in cash and the balance will be paid in restricted stock of CWDK. However, if the net income of Pilpol for 2006 audited under US GAAP is less than $2,945,000, the total consideration payable by Fine Lake will be reduced to an amount equal to four (4) times the audited net income of Pilpol. 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$30 million private placement.
Mr. Xing Hua Chen, CEO of CWDK, commented, "We are excited about the acquisition of Pilpol because it will expand our market penetration in the Guangxi Province, which has a population of 50 million. 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."
About China Water and Drinks Inc.
China Water and Drinks Inc. is a leading producer and distributor of bottled water in China. Through its production facilities in Guangzhou, Zhangjiang, Fexian, Nanning and Changchun, the Company produces bottled waters and distributes to 11 provinces in China under its own brand "Darcunk." The Company also supplies water to local and international beverage brands including Coca-Cola and Uni-President.