Feihe International strikes deal to go private

China-based milk powder and dairy products manufacturer Feihe International has entered into an agreement to go private, after a group led by chairman and chief executive officer You-Bin Leng agreed to acquire the company for $146m.

Under the terms of the deal the group, which includes Diamond Infant Formula, Platinum Infant Formula and Infant Formula Merger, Sub will pay $7.4 per share.

The transaction will be financed through a combination of an equity commitment of $28.1m by Morgan Stanley Private Equity Asia, an equity commitment of $8.16m by You-Bin Leng and a $50m term loan facility from Wing Lung Bank and Cathay United Bank.

Feihe International stated that the merger is expected to be completed in the second quarter of this year.

Currently, Leng holds a 45.34% stake in Feihe International.

On 3 October 2012, Feihe International received a proposal to go private from Leng and an affiliate of Morgan Stanley Private Equity Asia.

In November, the company appointed Oppenheimer as its financial advisor and O’Melveny & Myers as its international legal counsel to assist it in assessing the proposal.

Feihe International is a producer and distributor of infant formula, milk powder, soybean, rice and walnut products in China and operates through its wholly owned subsidiary, Feihe Dairy, and other subsidiaries.

The company owns over 200 milk collection stations, six production facilities, which produce approximately 2,020t of milk powder per day, and a distribution network of more than 80,000 retail outlets throughout China.

Feihe Dairy, established in 1962, operates processing and distribution facilities in Kedong, Qiqihaer, Gannan, Longjiang and Shanxi.