American Dairy to Sell 2.1 Mln Shares to Sequoia Capital

飞雪寒冰

China's American Dairy Inc. (NYSE: ADY), an infant formula producer, said it will sell 2.1 million shares to venture-capital firm Sequoia Capital for US$63 million.

In an online statement on Aug. 12, American Dairy said Sequoia will pay US$47 million in cash and US$16 million in bridge loans.

Beijing-based American Dairy said it might issue more shares to Sequoia if it fails to meet certain earnings targets in 2009 and 2010.

Sequoia might also request American Dairy to repurchase the shares, according to the agreement.

Sequoia will nominate a representative to American Dairy's board of directors, the statement said.

飞雪寒冰

"This transaction will allow us to increase our growth capital to fund our long-term strategic plan to achieve a leadership position within our industry," Leng You-Bin, CEO of American Dairy, said in the statement.

U.S.-based Sequoia has invested in a range of technology companies, including Apple Computer and Google.

American Dairy owns more than 200 milk collection stations in China, with a daily milk powder production capacity of 1,220 tons.

The transaction is expected to be finalized on Aug. 27, with Oppenheimer & Co. Inc. as the financial advisor.

In early morning trade in New York on Aug. 12, American Dairy was up 5.61 percent at US$29.43.