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HONG KONG, Sept 7, 2010 - (ACN Newswire) - Longrun Tea Group Company Limited ("Longrun Tea Group" or the "Group"; stock code: 2898) announced that Yunnan Longrun Trading Company Limited ("LRT"), an indirect wholly-owned subsidiary of the Group, entered into the Acquisition and Cooperation Agreement (the "Agreement") with the founders of "Tea Story" (the "Vendors") for the acquisition and operation of "Tea Story" trendy teahouse in the PRC.
According to the Acquisition and Cooperation Agreement, LRT and the Vendors agree to establish a joint venture company to be named as "JV Company" in the PRC. The JV Company shall be owned 70.9% by LRT and 29.1% by the Vendors. The registered share capital of the JV Company shall be RMB 2,000,000 (equivalent to approximately HK$2,288,000) and will be satisfied by payment in cash by both parties.
Under the Agreement, the Group will pay RMB 4,500,000 (equivalent to approximately HK$5,148,000) to the Vendors for the acquisition of the brand name "Tea Story" and the franchise network of "Tea Story" trendy teahouses. The Vendors undertake to procure not less than 350 existing and / or new franchisees operating "Tea Story" trendy teahouse to sign new franchise contracts with the JV Company.
"Tea Story" is a franchise operation of trendy teahouses in the PRC. Targeting mainly the young generation, major products served include bubble tea, cocoa beverages, fruit drinks, shakes, slushies and Taiwanese snacks and light refreshments. The Vendors are the founders of "Tea Story", a trendy teahouse which is operated by a company incorporated in the PRC with limited liability and operating "Tea Story" trendy teahouses in the PRC, Currently there are more than 400 "Tea Story" franchise trendy teahouses in mainland China, mainly located in Hunan, Yunnan, Guangdong and Zhejiang Provinces.
Dr. Chiu Ka Leung, Chairman of Longrun Tea Group Company Limited, said "This Agreement provides us a valuable opportunity to strengthen the Group's presence in the trendy teahouse market and to reach the younger segment of China's consumer market. The acquisition also enables the Group to efficiently expand its retail network in the PRC. We expect the Group to enjoy synergies by cross-selling different tea and food products in the franchise network of "Tea Story" trendy teahouses. In the future, we will continue to explore business and acquisition opportunities in the food and beverage sectors to enhance and strengthen our market position in tea and food and beverage sectors in the PRC, which in turn allows us to create additional values and returns for our shareholders."
Contact:
Strategic Financial Relations Limited
Heidi So
+852 2864 4826
heidi.so@sprg.com.hk
Maggie Au
+852 2864 4815
maggie.au@sprg.com.hk
Coco Wong
+852 2114 4951
coco.wong@sprg.com.hk
Fax: (852) 2804 2789 / 2527 1196
http://www.sprg.com.hk
Topic: Press release summary
Source: Longrun Tea Group
Sectors: Retail & eCommerce, Daily Finance, Daily News
http://www.acnnewswire.com
From the Asia Corporate News Network
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