Feihe Says Enters Merger Pact for $7.40/Share

Feihe International, Inc.(NYSE: ADY) ("Feihe", the "Company", "we", "us" and "our"), one ofthe leading producers and distributors of premium infant formula,milk powder and soybean, rice and walnut products in China, todayannounced that it has entered into an Agreement and Plan of Merger(the "Merger Agreement") with Diamond Infant Formula Holding Limited,a Cayman Islands exempted company ("Holdco"), Platinum Infant FormulaHolding Limited, a Cayman Islands exempted company and a wholly ownedsubsidiary of Holdco ("Parent"), and Infant Formula Merger SubHolding Inc., a Utah corporation and a wholly owned subsidiary ofParent ("Merger Sub"), pursuant to which Parent will acquire theCompany for US$7.40 per share of the Company's common stock withoutinterest (the "Merger Consideration"). The Merger Considerationrepresents a 21.3% premium over the closing price of US$6.10 pershare of Company common stock as quoted by the New York Stock Exchange on October 2, 2012, and a 23.5% premium to thevolume-weighted average price of the Company's common stock duringthe 30 trading days prior to October 2, 2012, the last trading dayprior to the Company's announcement on October 3, 2012 that it hadreceived a "going private" proposal from Mr. You-Bin Leng, theCompany's Chairman and Chief Executive Officer, and an affiliate ofMorgan Stanley Private Equity Asia. The Merger Consideration impliesan equity value of the Company of approximately US$147 million, on afully diluted basis. Pursuant to the terms and subject to the conditions of the MergerAgreement, Merger Sub will merge with and into the Company with theCompany surviving the merger and becoming a wholly-owned subsidiaryof Parent and a wholly-owned indirect subsidiary of Holdco (the"Merger"). In connection with and at the effective time of theMerger, each share of the Company's common stock that is outstandingimmediately prior to the effective time of the Merger will becancelled in consideration for the right to receive US$7.40 in cash without interest (the "Merger Consideration"), except for (a) sharesof the Company's common stock (including shares issuable upon theexercise of vested options) currently beneficially owned by Mr.You-Bin Leng, the Company's Chairman and Chief Executive Officer, Mr.Hua Liu, the Company's Vice Chairman and Chief Financial Officer, andMr. Sheng-Hui Liu, a director of the Company and vice president ofone of the Company's subsidiaries (collectively, the "RolloverHolders", and the shares of the Company's common stock beneficiallyowned by the Rollover Holders, the "Rollover Shares), which will becancelled for no consideration at the effective time of the Merger,and (b) shares of the Company's common stock owned by shareholderswho have exercised and not effectively withdrawn or lost the right ofdissent in accordance with applicable Utah law, which shares will becancelled at the effective time of the Merger and will entitle theformer holders thereof to receive the appraised value thereon inaccordance with applicable Utah law.