BEIJING, Sept. 27, 2016 /PRNewswire/ -- Origin Agritech
Ltd. (Nasdaq: SEED) today announced the company has entered into a
definitive agreement to sell its proprietary China-based commercial corn seed production
and distribution business for RMB 400
million (approximately USD $60
million) to Beijing Shihui Agricultural Development Co, Ltd
("Beijing Shihui").
This is the next phase in management's plan to establish Origin
as a global seed germplasm and biotech trait leader. Origin will
retain its corn breeding and biotech research and development
capabilities, which include modern laboratories, extensive field
testing networks and off-season winter nursery in Hainan, to expand and pursue germplasm and
trait licensing opportunities. Through Xinjiang Originbo, Origin
also will maintain its "Green Pass" status, allowing it the
competitive advantage of introducing new hybrid varieties to the
Chinese market through an expedited government approval
process.
This transaction is subject to customary closing conditions and
shareholder approval. It is expected to close in the first quarter
of 2017.
Following a strategic review by the special committee of the
board of directors, it was determined that the sale of Origin's
proprietary commercial seed business would strengthen its balance
sheet and enable it to focus on biotechnology trait and seed
germplasm research and development.
"The sale and repositioning of Origin's commercial seed business
represents a significant step in evolving the company's strategic
direction and positions Origin for a stronger future," said
Bill Niebur, Origin CEO. "This
transition will allow us to emphasize biotechnology and strategic
partnerships both within China and
around the globe. We believe the sale of these assets to Beijing
Shihui realizes the value of our commercial seed business. We will
utilize the proceeds to accelerate the licensing of our biotech
traits and seed germplasm to other seed companies in China. We will also develop our
non-genetically modified corn and soybean business in the United States, making what we believe will
be a stronger and more attractive business in the years to
come."
Under the terms of this deal, the acquirer of the China-based commercial seed business will
enter into separate license agreements to pay Origin a royalty
stream for the present and future product portfolio and a
technology access fee for the research and development effort that
Origin provides going forward in the areas of product discovery and
development, hybrid registration, trait integration and
intellectual property protection.
The transaction includes all or substantial equity interests in
Linze Origin Seed Limited, Changchun Origin Seed Technology
Development Limited and DenongZhengcheng Seed Limited, the Linze
branch and Zhengzhou branch of
Beijing Origin Seed Limited, and certain real estate owned by
Beijing Origin Seed Limited.
"Through this transaction and the development of our North
American non-GM business, we believe that we are setting the stage
for compelling growth opportunities," Niebur said. "We have a very
exciting future ahead of us and look forward to providing our
investors with additional updates on our business in the upcoming
weeks and months."
Duff and Phelps served as the special committee's financial
advisor and Davis Polk &
Wardwell LLP as legal advisor in connection with this
transaction.
Beijing Shihui is an internet agricultural enterprise that
provides agricultural products and technology services to farmers,
suppliers and agriculture-related enterprises in China.
Conference Call
The Company will host a teleconference on Wednesday, September 28, 2016, at 8:30 a.m. ET / 8:30
p.m. Beijing time to
discuss this transaction and answer questions from investors. To
participate in the call, please dial the following numbers
approximately five minutes prior to the scheduled start time.
US Toll
Free:
|
1-888-346-8982
|
International
Toll:
|
1-412-902-4272
|
Mainland China Toll
Free:
|
4001-201203
|
Hong Kong Toll
Free:
|
800-905945
|
A webcast will also be available in the 'Events' tab of the
Company's investor relations website at
http://www.originseed.com.cn/en/.
A replay of the call will be available shortly after the
conference call through October 5,
2016. The dial-in numbers for the replay are:
US Toll
Free:
|
1-877-344-7529
|
International
Toll:
|
1-412-317-0088
|
Replay Access
Code:
|
10093446
|
# # #
Origin Agritech Limited, founded in 1997 and headquartered in
Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is China's leading agricultural biotechnology
company, specializing in crop seed breeding and genetic
improvement, seed production, processing, distribution, and related
technical services. Leading the development of crop seed
biotechnologies, Origin Agritech's phytase corn was the first
transgenic corn to receive the Bio-Safety Certificate from
China's Ministry of Agriculture.
Over the years, Origin has established a robust biotechnology seed
pipeline including products with glyphosate tolerance and pest
resistance (Bt) traits. Origin operates production centers,
processing centers and breeding stations nationwide with sales
centers located in key crop-planting regions. Product lines are
vertically integrated for corn, rice and canola seeds. For further
information, please visit the Company's website at:
http://www.originseed.com.cn or
http://www.originseed.com.cn/en/.
Forward-Looking Statements
This communication contains "forward-looking statements" within
the meaning of the federal securities laws, including Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as "expect," "anticipate," "intend," "plan,"
"believe," "seek," "see," "will," "would," "target," similar
expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. Forward-looking statements are not guarantees of
future performance and are based on certain assumptions and
expectations of future events which may not be realized.
Forward-looking statements also involve risks and uncertainties,
many of which are beyond the company's control. Some of the
important factors that could cause the company's actual results to
differ materially from those projected in any such forward-looking
statements are: fluctuations in energy and raw material prices;
failure to develop and market new products and optimally manage
product life cycles; ability to respond to market acceptance,
rules, regulations and policies affecting products based on
biotechnology and, in general, for products for the agriculture
industry; outcome of significant litigation and environmental
matters, including realization of associated indemnification
assets, if any; failure to appropriately manage process safety and
product stewardship issues; changes in laws and regulations or
political conditions; global economic and capital markets
conditions, such as inflation, interest and currency exchange
rates; business or supply disruptions; security threats, such as
acts of sabotage, terrorism or war, natural disasters and weather
events and patterns which could affect demand as well as
availability of products for the agriculture industry; ability to
protect and enforce the company's intellectual property rights; and
successful integration of acquired businesses and separation of
underperforming or non-strategic assets or businesses. The company
undertakes no duty to publicly revise or update any forward-looking
statements as a result of future developments, or new information
or otherwise, should circumstances change, except as otherwise
required by securities and other applicable laws.
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SOURCE Origin Agritech Limited