Biostar Pharmaceuticals, Inc., a developer, manufacturer and marketer of pharmaceutical and health supplement products for a variety of diseases and conditions, today announced that its wholly owned subsidiary, Shaanxi Aoxing Pharmaceutical, Ltd., entered into a Share Transfer Agreement to acquire Shaanxi Weinan Huaren Pharmaceuticals, Ltd. from the holders of 100% of equity interests in Shaanxi Weinan. The aggregate purchase price is RMB 61 million (approximately USD$9.62 million), all cash and payable in several tranches, as discussed in detail below.
Shaanxi Weinan owns drug approvals and permits for a portfolio of 86 drugs and one health product, all of which, following the completion of this acquisition, will be added to the Company’s current drug portfolio. The Company anticipates to complete this acquisition on or before October 31, 2011, after all the closing conditions are met, as discussed below .
Pursuant to the terms of the Agreement, the Company agreed to pay cash purchase consideration as follows:
— RMB 30 million (approximately USD$4.73 million) was deposited with the Equity Holders on December 29, 2010,
— RMB 15 million (approximately USD$2.37 million) will be paid to the Equity Holders within three (3) business days as of the Closing Date (as defined below), provided they completed their respective share transfer registration with the applicable PRC authorities within 15 days of this Agreement, and
— RMB 16 million (approximately USD$2.52 million) upon the completion of the audit (by the auditing firm appointed by the Company) of Shaanxi Weinan’s financial statements for 2009 and 2010 and confirmation of its 2009 and 2010 revenues of at least RMB 21 million and RMB 28 million, respectively, and of the net profit after tax of at least 15%, and the Equity Holders have paid their respective individual income and other applicable taxes for the transfer of the Equity Ownership to be completed within 2 months of this Agreement, and have performed certain additional obligations under the Agreement, and there are no material change in the operations or finances of Shaanxi Weinan, at closing of the proposed acquisition.
Ronghua Wang, Biostar Pharmaceutical’s Chairman of the Board and Chief Executive Officer noted, “The Shaanxi Weinan’s portfolio of 86 drugs and one heath product, does not, for the most part, overlap with our current product line. This acquisition should enable us to further increase our market share in the 25 provinces where we currently distribute and expand into the remaining provinces. Upon closing, we will start marketing many of these products using our extensive sales network, which covers 25 provinces and over 11,000 rural medical sales outlets. This acquisition is expected to be accretive to earnings in 2012.”