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FUQI acquires 00% ownership of Temix
Aug '08
FUQI International Inc announced that it has completed the purchase of two jewelry companies, Shanghai Tian Mei Jewelry Co Ltd and Beijing Yinzhong Tian Mei Jewelry Co Ltd collectively known as Temix ("Temix") on August 7, 2008. FUQI has acquired 100% ownership of Temix an asset purchase transaction.

Under the terms of the transaction, FUQI paid a total consideration of RMB 135 million (approximately USD$19.7 million, based on a conversion price of USD: RMB 1.00:6.86), with RMB 80 million (approximately USD$11.7 million) consideration to be paid in cash and the remaining consideration to be paid in restricted common stock.

The RMB 80 million paid in cash is for the value of the inventory on hand in Temix retail locations. The issuance of FUQI's shares included in the equity portion of the purchase price for Temix is RMB 55 million (approximately USD$8.0 million), or 1,080,666 shares, and one-half of the shares will be placed into escrow and remain subject to the achievement of certain performance targets over the two-year period following closing.

Temix is a 50 outlet branded jewelry store chain with locations principally in Beijing, Shanghai, and Ningbo. Of the 50 outlets, 6 are stand-alone stores and 44 are store counters within department stores.

The chain sells primarily diamond jewelry, but also sells karat gold and gemstone jewels, including ruby and jade. For the year ended December 31, 2007, Temix had revenues of approximately USD$12.3 million (unaudited) and the company was profitable.

Through the first six months of 2008, Temix had revenues of approximately USD$9.2 million (unaudited) and was profitable.

Temix has been led by Mr. Chujian Huang, who is the founder and CEO of Temix and a 15-year veteran in China's jewelry industry, particularly in the Yangtze Delta region.

Upon closing, Mr. Huang became a full-time employee of FUQI, responsible for managing the Temix chain, and reports to Ms. Jianying Li, Director of Retail Operations for FUQI International. Mr. Huang and the core Temix management team agreed to stay with FUQI for at least three years.

Mr. Yu Kwai Chong, Chairman of FUQI International commented, "We are pleased to close this transaction, which strengthens our efforts in China's retail jewelry market.

The Temix acquisition is expected to be accretive to our business immediately upon closing and provides us with a strategic opportunity to further diversify our business, improve our margin performance, and expand our market presence.

FUQI's strong financial position can strengthen the performance at each Temix outlet by better capitalizing their counters and stores to ensure they have an appropriate level of inventory, a compelling mix of fashionable jewelry designs and strong brand promotion.

With this acquisition, we will have a total of 53 outlets, comprised of 47 store counters and 6 retail stores and are well on plan to reach our goal for the full year to open or acquire up to 60 to 80 retail counters and 8 to 10 retail stores.

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