China Medicine Signs Equity Transfer Agreement With Sinoform

China Medicine has reported that through its wholly-owned subsidiary, Konzern, it has signed an equity transfer agreement to acquire 100% of equity interests in Sinoform.

Under the terms of the Transfer Agreement, China Medicine will acquire 100% of Sinoform’s equity in LifeTech for a cash payment of $8.3m; and the assumption of $13.2 million in debt.

Upon closing of the acquisition, China Medicine will obtain LifeTech’s assets, appraised at $25.5m, which include product licenses, permits, patents, land use rights, manufacturing facilities, production equipment and a portfolio of 39 TCM and Western medicine products that treat a variety of illnesses, including two new products currently undergoing clinical trials.

The acquisition is expected to close on or before December 31, 2009. Pursuant to the transfer agreement, the company will pay approximately $0.549m of the cash purchase price and make a repayment of $7.3m of LifeTech’s debt upon the execution of the agreement.

Additionally, upon approval of the transaction by the foreign trade bureau, the company will pay an additional $3.7m. The remaining balance of the purchase price will be made on or before June 30, 2010.

Moreover, the company plans to finance the acquisition with existing cash and operating cash flow, and will explore opportunities for financing from commercial banks, if needed.

Senshan Yang, chairman and CEO of China Medicine, said: “This acquisition represents a strategic move in our evolution to a vertically integrated pharmaceutical company and we expect it will lay the foundation for a significant contribution to our profitability in the coming years. Specifically, the acquisition of LifeTech allows us to enhance our product line with high margin pharmaceuticals and improve our manufacturing capabilities for existing propriety products.”