SAIF Invests in Huiyuan at a Premium and Launches Generous Employee Motivation Plan With Controlling Shareholder

HONG KONG, July 28 /PRNewswire-Asia/ -- China Huiyuan Juice Group Limited ("Huiyuan Juice" or the "Company", stock code: 01886.HK), a leading fruit and vegetable juice producer in China, announced today that it received notice from Danone Asia Pte Ltd. ("Danone"), its second largest shareholder, that Danone had entered into a conditional sale and purchase agreement with a famous Asian investment fund-SAIF Partners ("SAIF"). Pursuant to it, SAIF agreed to purchase from Danone, its entire shareholding in the Company of 337,497,501 shares or 22.98% of total issued share capital of the Company at the price of HK$6.00 per share. This price represents a 10.7% premium over yesterday's closing price of the Company's shares. Total consideration for the transaction amounts to HK$2,024,985,006. Upon completion of the deal, SAIF will become the second largest shareholder of the Company.

Meanwhile, in order to express their gratitude for employees' efforts and contributions and to motivate them to continue to dedicate their efforts, SAIF entered into a deed of trust and indemnity with Mr. Zhu Xinli, Chairman of the Company, and another two senior management members for the establishment of a trust (the "Trust"). The Trust will hold the net cash proceeds from the exercise of the call options granted by SAIF of approximately 100 million shares to be purchased from Danone, which represent 7.0% of the total issued share capital of the Company. According to the "Employee Cash Benefit Plan", if the Company achieves certain performance targets in the next three years, net cash proceeds from the placing of the option shares after the deduction of the payment to SAIF and relevant expenses will be paid to eligible employees through the Trust. The share options would increase to the equivalent of 7.5% of the Company's issued share capital if the Company beats the performance targets. The Employee Cash Benefit Plan is aimed at driving rapid growth of business by motivating the entire staff to be more focused on the development of fruit and vegetable juice business.

Despite Coca-Cola's failure to acquire it in 2008, the Company has attracted another international investor, SAIF, to acquire a substantial amount of its shares at a premium. The launch of the "Employee Cash Benefit Plan" by Mr. Zhu, Chairman and a major shareholder of the Company, and by SAIF not only shows SAIF's confidence in Huiyuan's future growth, but also demonstrates Mr. Zhu's conviction in his business philosophy, his determination to grow together with the Company and its staff and his commitment to maximize return to shareholders. According to the 2009 annual report, the Company's net profit jumped 162.5% year-on-year to RMB 234 million amidst a difficult economic environment. Despite intense competition in the juice market, Huiyuan launched a new product "Juizee Pop" in 2010 that will further enhance its prospects.

Mr. Andrew Y. Yan, the managing partner of SAIF, has succeeded Mr. Qin Peng as the non-executive director of the Company and a member of the Remuneration and Nomination Committee and the Strategy and Development Committee respectively, effective from 28 July 2010.

Mr. Zhu Xinli, Chairman of Huiyuan, said, "Over the past 18 years, Huiyuan has dedicated itself to the development of the fruit and vegetable juice business in China. We became the market leader because we are determined. SAIF has extensive investment experience in the global agriculture, food and beverages industries. As a shareholder, SAIF and its experience will enable us to further enhance Huiyuan's brand image and management quality. Moreover, our value chain should be further improved. Meanwhile, after Mr. Yan joins the board, our corporate governance should improve. The long-term strategic investment of SAIF in Huiyuan signifies its confidence in the company's management team. To express its support for us, SAIF and the company jointly launched an employee cash benefit plan with an aim of encouraging our management and staff members to continue contributing their efforts and to expand Huiyuan into a leading player in the international market. We will focus on the development of fruit and vegetable juice business in China. I will work together with the entire staff to expand our business and accelerate our development to generate greater returns to shareholders."

Mr. Andrew Y. Yan, the managing partner of SAIF Partners, commented on this transaction, "SAIF has confidence in Mr. Zhu's leadership. We believe that the entire staff, under his leadership, will strive hard to create considerable returns for shareholders. Although we have made investments in various industries in China, this is the first time we have launched an employee cash benefit plan. The move indicates our long term commitment to Huiyuan, our confidence in its prospects and aligns our interests with the company. Both parties will work together to maximize shareholders' returns. We believe that by combining Huiyuan's seasoned management team, their insight into the China market, its strong brand power and complete value chain with SAIF's international experience, the company's competitiveness will be substantially improved. It will be in a better position to explore enormous business opportunities in China."

Mr. Qin Peng, Chairman of Greater China of the Danone Group, said, "Danone has been a shareholder of this leading enterprise since 2006. Both sides have cooperated together with each other harmoniously for years. On behalf of Danone, I express my heartfelt gratitude to Mr. Zhu, the management team and staff members for their contributions to the company and sizable returns they created for us. Danone entered into this transaction because of the shift of our global investment strategy. We believe Huiyuan will sustain robust growth after the introduction of the new investor. Danone hopes that it can cooperate with Huiyuan once again when opportunities arise."

About Huiyuan Juice

Huiyuan Juice, founded in 1992, is a leading fruit and vegetable juice producer in China. It was listed in the Stock Exchange of Hong Kong Limited in 2007. Huiyuan is the No.1 brand in China's juice market and was designated a "PRC Famous Trademark" and a "PRC Famous Brand Product" respectively. According to AC Nielsen, Huiyuan is the largest 100% juice and nectars producer in China, ranked by sales volume and sales value for the year ended 31 December 2009. It commands 52.0% share in the 100% juice market and 45.6% share in the nectars market. Huiyuan possesses an extensive nationwide distribution network as well as plants at strategic locations. Its juice concentrates, juice purees and juice products are also exported to more than 30 countries and regions including the USA, Japan and Australia.

Huiyuan Juice has 40 modern factories and orchards with growing area of over 5 million acres in China. It possesses more than 100 advanced cold aseptic processing production lines for producing products such as PET bottles, combibloc and Tetra Pak. Huiyuan was the first producer to adopt cold aseptic processing technology in the industry. Its factories have passed ISO9001 quality system certification, HACCP (Food Safety Management) System and ISO22000 quality system certification, and the BRC (British Retail Consortium standard) certification. The company has launched more than 500 kinds of products.

About SAIF

SAIF Partners is a leading Asian private equity firm headquartered in Hong Kong, with dedicated local offices in China and India. The fund currently manages over US$2 billion.

SAIF makes privately negotiated equity or equity-linked investments across several growth sectors, such as consumer products & services, technology, media, telecom, financial services, healthcare, travel and tourism, and manufacturing. SAIF focuses its efforts primarily on China, India, Hong Kong and Taiwan.

About Danone

Danone is a Fortune 500 company and one of the most successful healthy food companies in the world. Its mission is to bring health through food to as many people as possible. Fulfilling this mission is a major contributor to Danone's continuous strong growth. Danone, with 160 plants and around 80,000 employees, has a presence in all five continents and over 120 countries. In 2009, Danone recorded Euro 15 billion in sales. Danone enjoys leading positions on healthy food in four businesses: fresh dairy products (no 1 worldwide), water (no 2 on the packaged water market), baby nutrition (no 2 worldwide) and medical nutrition. Listed on Euronext Paris, Danone is also ranked among the main indices of social responsibility: Dow Jones Sustainability Index Stoxx and World, ASPI Eurozone and Ethibel Sustainability index.

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SOURCE China Huiyuan Juice Group Limited