SHENZHEN, China, Aug. 28 /Xinhua-PRNewswire-FirstCall/ -- China Water & Drinks, Inc. (OTC Bulletin Board: CWDK) ("China Water & Drinks" or "the Company"), a leading producer and distributor of purified bottled water in the People's Republic of China ("PRC"), today announced that it acquired 66.67% of Shenyang Aixin, a purified bottled water company in Shenyang City, Liaoning Province on August 24, 2007.
China Water & Drink paid $1.06 million and 177,300 shares of the Company's common stock for the 66.67% equity interest of Shenyang Aixin. Shenyang Aixin has an annual production capacity of about 80 million liters for purified bottled water. After the acquisition, Shenyang Aixin will expand its production capacity by another 80 million liters to about 160 million liters annually. The company will incur between $1 million to $1.5 million for a new production line to expand the capacity and to modify its existing facilities to meet the high quality standards set by China Water & Drinks. The revenue contributed from this Shenyang Aixin plant is expected to be $7.5 million per annum.
Shenyang Aixin has established a distribution network in Shenyang City, which will be utilized by China Water & Drinks to develop the local market for its brand product "Darcunk".
The new Shenyang plant allows China Water & Drinks existing Changchun plant to be more focus on its local market and hence saves costs on transportation. The product mix is expected to be in line with the Company's current product mix of 70.5% Darcunk, 27.5% OEM and 2% private label.
"The acquisition of Shenyang Aixin forms part of our growth strategy aimed at expanding our production capacity and enhancing our market penetration. This is a strategic location for servicing the markets of Shenyang City and its surrounding areas. By reducing our transportation costs we will improve our gross margin," commented Mr. Xing Hua Chen, Chief Executive Officer of China Water & Drinks. "Shenyang City represents one of the largest per capita consumption of bottled water cities in China and is an important market to build out our brand for quality purified bottled water."
About China Water & 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 and distributes bottled water to 11 provinces in China. The Company markets its own product under the brand "Darcunk", supplies purified water to both local and international beverage brands such as Coca-Cola and Uni-President, and provides private label bottled water for companies such as Sands Casino, Macau.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to the Company's ability to complete product orders, coordinate product design with its customers, ability to expand and grow its distribution channels, political and economic factors in the People's Republic of China, the Company's ability to find attractive acquisition candidates, dependence on a limited number of larger customers and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
