BEIJING & SAN DIEGO -- Origin Agritech Limited announced that it has entered into an agreement to acquire a controlling 52.21 percent interest in Denong Zhengcheng Seed Company, Ltd., a developer, producer and marketer of rice, cotton, and rape seed hybrids in China, for approximately $5 million in cash.



Denong is best known for its hybrid rice seed products, which it sells primarily in the southwest region of China.



Denong has a strong portfolio of proprietary hybrid rice seeds. It is currently producing and selling 10 proprietary rice hybrids, six proprietary rapeseed hybrids, and five proprietary cotton hybrids. The company has four research facilities and five production facilities, all located in southwestern China. Denong has approximately 350 employees.

Gengchen Han, Origin's CEO, said, "We are extremely pleased with this acquisition because Denong's strengths in the hybrid seed market complement our own and broaden our hybrid offering. With the acquisition of the controlling interest in Denong, we now have a significant presence in China in two major crops, corn and rice.



"In addition, we have added complementary offerings in cotton seed and have a new offering, rapeseed, to add to our product mix. We expect that the addition of the hybrid pipeline of Denong to that of Origin will further strengthen our growth over the next few years. In addition, Denong brings with it a large, localized distribution network that we can utilize to augment the sale of our current product line.

"From a financial point of view, the acquisition of Denong will not change our previously issued guidance on earnings of $11 million on projected revenues of $55 million for the year ending June 30, 2006. However, we expect that Denong will become a significant contributor over the next few years as it integrates with Origin. Closing of the transaction is contingent only on routine government registration procedures, which are expected to be completed within 30 days."

Founded in 1997, Origin specializes in the research, development, production, sale and distribution of hybrid corn rice and cotton seeds in China. The Company owns or leases facilities in, among other locations, Beijing, Gansu, Henan, Helongjiang, Liaoning, Jilin, Hainan and the Sichuan provinces, and also has an office in San Diego, CA.



SOURCE: Origin Agritech Limited via Business Wire.