FUQI International to acquire Temix

FUQI International, Inc. has entered into definitive agreements for its acquisitions of Shanghai Tian Mei Jewelry Co. Ltd. and Beijing Yinzhong Tian Mei Jewelry Co. Ltd., collectively known as Temix (’Temix’), for 100% ownership of the business. The closing is contingent on a number of items, including obtaining governmental approval.

The purchase price for Temix is RMB 135 million (approximately USD$19.3 million, based on a conversion price of USD: RMB 1.00:7.0), with approximately $11.4 million of the consideration to be paid in cash and the remaining consideration to be paid in restricted common stock. The $11.4 million cash portion is primarily for the current value of the inventory on hand in Temix’s retail locations. The number of FUQI’s shares to be included in the equity portion of the purchase price for Temix is subject to the achievement of certain performance targets over the two-year period following the acquisition. FUQI will acquire the Temix chain operation through its wholly owned subsidiary, Fuqi International Holdings Co., Ltd.

Temix is a 50 outlet branded jewelry store chain with locations primarily in Beijing, Shanghai and Ningbo. Of the 50 outlets, 5 are stand alone stores and 45 are store counters within department stores. The chain primarily sells 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 $12.3 million (unaudited) and the company was profitable.

The acquisition will also bring to FUQI Temix’s license to buy diamonds from the Shanghai Diamond Exchange, China’s only legal, government-owned diamond supplier, which will allow FUQI to purchase diamonds directly and potentially realize additional upside to gross margin. The Company estimates that due to the government approval process, Temix will contribute to its revenue stream in the 2008 third quarter.

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. Mr. Huang will become a full time employee of FUQI responsible for managing the Temix chain and will report to Ms. Jianying Li, Director of Retail Operations for FUQI International.

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