Jan. 4 (Bloomberg) -- Wuxi PharmaTech Inc., a Chinese contract researcher for nine of the world's top 10 drugmakers, agreed to buy closely held AppTec Laboratory Services Inc. for about $151 million to bolster biotechnology production.

AppTec, of St. Paul, Minnesota, is expected to have $70 million to $72 million in 2007 revenue with a compound annual growth rate of 46 percent since 2004, the companies said in a conference call today. Like Wuxi, AppTec provides laboratory testing of devices and biopharmaceuticals. Wuxi will also assume $11.7 million in debt.

The deal gives Shanghai-based Wuxi, which now focuses on chemistry and traditional pharmaceuticals, access to AppTec's expertise in testing and manufacturing biotechnology-based medicines and medical devices. This is the biggest Chinese takeover of a U.S. company since Lenovo Group Ltd. bought International Business Machines Corp.'s PC business for $1.75 billion in December 2004.

AppTec has ``a very complimentary service which Wuxi needs,'' said Jinsong Du, a Hong Kong-based analyst at Credit Suisse Group, before the deal was announced. Du has an ``outperform'' rating on Wuxi. ``It helps them build up their customer base and may potentially bring more service offerings,'' he said.

More Than Doubled

Wuxi's stock has more than doubled from its initial public offering price in August, giving it a market value of $1.87 billion. The stock was unchanged at $30.30 at 4 p.m. in New York Stock Exchange composite trading.

The all-cash transaction will immediately add to Wuxi's earnings excluding the amortization of the acquired assets and other one-time charges. Wuxi said it has more than $200 million in cash on hand and will not have to do any other financing to pay for the deal.

Wuxi, with more than 2,500 chemists, has 80 customers including New York-based Pfizer Inc., the world's biggest drugmaker. Net income tripled to $8.6 million in the third quarter from a year earlier, the Chinese company said. Profit in the nine months ended Sept. 30 was $21.8 million, compared with $4.9 million a year earlier.

The acquisition comes five months after the Shanghai-based company raised $185 million in its IPO in New York.

``Cross-border acquisitions in the health care sector are a relatively new thing, and we'll see more in 2008,'' Du said.

No Move

Wuxi Chief Executive Officer Li Ge said he doesn't plan to move AppTec's facilities or 495-person staff to China and that no Chinese company has all the testing and manufacturing capabilities of AppTec.

``This acquisition allows Wuxi to immediately obtain biologics capabilities and expertise, gain a significant U.S. footprint, and expand our U.S. customers base,'' said Li on a conference call with analysts today.

AppTec's top 20 customers account for about 50 percent of its revenue. About 25 percent of Wuxi's current customers also have contracts with AppTec.

While Chinese companies bought more U.S. assets last year, they mainly avoided full takeovers. China's investment in U.S. companies reached a record $9.6 billion in 2007, according to data on announced transactions compiled by Bloomberg. None of the biggest deals was a takeover.

China Minsheng Banking Corp., China's first non-state-owned bank, announced plans in October to buy as much as 20 percent of UCBH Holdings Inc., the biggest lender serving the Chinese community in the U.S.

Past Acquisitions

Morgan Stanley, the second-biggest U.S. securities firm, last month agreed to sell up to 9.9 percent of itself to China's sovereign wealth fund for about $5 billion. Bear Stearns Cos., reeling from mortgage-related losses, agreed in October to sell $1 billion of convertible securities to Citic Securities Co., Asia's biggest brokerage by market value.

Chinese acquisitions of overseas assets gathered pace in 2006 and reached a record last year with $28 billion of purchases announced, Bloomberg data show. Still, few full takeovers have been attempted after Cnooc Ltd., China's biggest offshore oil producer, failed with an $18.5 billion bid for Unocal Corp. in 2005 because of opposition from U.S. lawmakers.

JPMorgan Chase & Co. advised Wuxi and Piper Jaffray & Co. helped AppTec on the acquisition.

The transaction has been approved by the AppTec and Wuxi boards of directors and AppTec's shareholders, both companies said in the statement. It is expected to close in the first quarter this year, subject to regulatory approval. No approval by Wuxi shareholders is required, the statement said.

Separately, Wuxi promoted Edward Hu to chief operating officer, the company said. Hu, hired in August as executive vice president of operations, was formerly chief operating officer at Tanox Inc., a Houston-based biotechnology company acquired in August by Genentech Inc., based in South San Francisco, California.

(A replay of today's conference call can be accessed by clicking here.)

To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net; Shannon Pettypiece in New York at spettypiece@bloomberg.net.

Last Updated: January 4, 2008 16:23 EST