Shineco, Inc. (NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural products, specialized textiles, and other health and well-being focused plant-based products in China, today announced that the Company, through its joint venture company, Xinjiang Shineco Taihe Agriculture Technology Ltd. ("Xinjiang Taihe"), has entered into a Strategic Cooperation Agreement (the "Agreement") with Western Xinjiang Tiansheng Agricultural Development Co., Ltd. ("Xinjiang Tiansheng"), a leading nursery and agricultural company with extensive industry experience in Xinjiang, China. Xinjiang Tiansheng has the most advanced equipment in southern Xinjiang, 200 acres of modern all-glass greenhouse as well as 2,470 acres of planting land located in the Bosten Lake and Lotus Pool 5A scenic area.
Pursuant to the Agreement, Shineco intends to acquire 51%-60% equity interest in Xinjiang Tiansheng's shares in exchange for consideration consisting of cash and Shineco's newly issued shares (amounting to no less than 14% of the equity interest of Shineco post acquisition), subject to a definitive agreement to be entered in by the parties. Both parties agree to expand strategic cooperation on upgrading nursery greenhouse, establishing a large-scale, mechanized, intelligent modern apocynum base as well as deepen related follow-up cooperation, such as building a National Apocynum Park along the 300 kilometer long Tarim River. The definitive Share Exchange and Acquisition Agreement is expected to be entered into before December 31, 2017.
The cooperation will allow Shineco to share Xinjiang Tiansheng's 20 years' experience of utilizing modern glass nursery greenhouse to serve apocynum planting and grafting. It expects that the number of annual seedlings can reach 400 million, laying a solid foundation for cultivating seedlings and building modern farms. Also, the current 2,470 acres of planting land of Xinjiang Tiansheng's will be built into a large-scale, mechanized, intelligent modern apocynum base to improve the survival rate and production capacity of apocynum seedlings. By the greenhouse nursery transplant transplanting to outdoor hardening, survival rate can be increased 4 times up to 95%. Given the average price of apocynum is RMB 0.5 per plant, the total product value can reach RMB120 million.
Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, stated, "This strategic cooperation is another milestone of Shineco. The greenhouse nursery base planed to be established will cultivate 600 million apocynum plants each year, which can meet the needs of our production. If breeding in February and make nurseries in April next year, the 600 million apocynum plants could be sold at RMB 300 million with a net profit over 45%."
Mr. Zhang continued, "Xinjiang Tangsheng is a leading nursery and agricultural company and experiencing significant growth backed by of its obvious geographical planting advantages, which will become great asserts for the future development of Shineco. We believe adding Xinjiang Tiansheng's capabilities and advantage to our operation and technology infrastructure will allow us to continue to innovate for our customers as the markets evolve. We are extremely excited about the opportunities ahead for this cooperation."