Commonwealth Biotechnologies (CBI) has executed an agreement to acquire all of the outstanding shares of GL Biochem (Shanghai) as well as GL Biochem (Danyang), GL Peptide (Binhai), and 86% of the shares of GL Peptide (Shanghai).
CBI management anticipates that the acquisition of the GL Group, in combination with revenues from CBI’s existing peptide subsidiary, Mimotopes, will result in consolidated revenues of over $18m and net income after tax of over $3m in 2010.
Originally contemplated as a two-stage transaction involving the purchase of GL in the first instance, followed by the purchase of the three affiliated businesses, CBI and the shareholders of the GL Group have agreed to complete the transaction in a single step, thus bringing the full benefit of the GL Group’s revenues, income, and assets to CBI immediately.
The transaction will involve the issuance of CBI common stock to the shareholders of the GL Group, such that the shareholders of the GL Group will hold 68-80% of CBI’s share capital on a fully-diluted basis. The exact percentage will be determined by the GL Group’s forthcoming 2008 PCAOB-qualified audited after-tax profit results. CBI recently satisfied a key condition precedent for the acquisition, that being the execution of a definitive agreement for the sale of its CBI Services and FIL divisions to Bostwick Laboratories. The GL Group transaction is still subject to CBI shareholder and regulatory approvals.
Bill Guo, chairman and CEO of CBI, said: “The merger with the GL Group will propel CBI into a very strong position in the rapidly growing peptide outsourcing market and brings with it significant opportunity for free cash flows and a strong, debt-free balance sheet. The transaction is expected to be earnings accretive and has excellent potential to generate increased value for our shareholders. We are very excited about the financial strength and growth prospects that the transaction will bring to CBI.”
Hongyan Xu, president and CEO of GL Group, said: “We are excited about this transaction because it forges a closer link with our peptide business partner Mimotopes Pty Ltd and also brings with it the benefits of becoming a public company. We believe that both Mimotopes and GL will show significant revenue and income growth for custom peptides in 2009/2010 and we also anticipate significant demand for GL’s new product offerings. We look forward to working together in the new CBI Group to strengthen our combined position as the largest global provider of peptide products and peptide contract research.”