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Morgan Stanley nears completion for Feihe take-private

5 Mar 2013

china beijing_sqChinese milk powder producer Feihe International is about to be bought out and taken private by a group led by chairman and CEO You-Bin Leng in a deal backed by Morgan Stanley’s private equity fund.

The buyout will value the business – which is currently 45.34 per cent owned by Leng – at $146m, or $7.40 per share, a premium of 5.5 per cent to its closing price on Friday.

Morgan Stanley’s Private Equity Asia III fund will provide $28.1m, while Leng has made an equity commitment of $8.16m and Wing Lung Bank and Cathay United Bank have agreed to provide a $50m loan facility to fund the deal.

According to the Asian Venture Capital Journal, the NYSE-listed business will likely be restructured as a Cayman Islands entity, paving the way for the owners to relist it on another stock exchange, possibly in Hong Kong.

The most recent financial results report form Feihe showed that its revenues climbed 4.3 per cent to $66.1m in the third quarter of 2012, while net income reached $7.5m compared with $473,000 a year earlier.

Back in October Morgan Stanley Private Equity Asia and Leng put in a bid for Feihe and the dairy group said it intended to form a special committee of independent directors to consider this proposal.

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