American Dairy Inc., which makes and distributes infant formula, said Wednesday that private investment firm Sequoia Capital will pay $63 million for 2.1 million of its common shares.The purchase price includes $47 million in cash and the conversion of a $16 million bridge loan American Dairy received from Sequoia last month.
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The agreement also allows Sequoia to nominate someone to American Dairy's board and provides for additional shares to be issued to the private investment firm if some 2009 and 2010 earnings goals are not reached. Sequoia can also require a buyback of stock if certain events occur.The private placement is targeted to close on Aug. 27.
In addition to infant formula, American Dairy makes and distributes milk powder, soybean, rice and walnut products in China.
Shares of Beijing-based American Dairy gained $1.69, or 6.1 percent, to $29.48 in morning trading. Over the past year, the stock has traded in a range of $6.40 to $44.
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