Winteam Pharmaceutical Group Ltd. (570), a maker of drugs in China, will buy a producer of traditional Chinese medicine for as much as HK$3.05 billion ($393 million) to gain products including an osteoporosis treatment.
The company will pay for Tongjitang Chinese Medicine Co. with cash and new stock and will sell 416.5 million new shares at HK$3.10 each to help fund the deal, according to a Hong Kong stock exchange filing yesterday. Winteam said it will also assume 274.4 million yuan ($44.7 million) of debt.
China is expanding its national health insurance coverage, while adding to a list of essential drugs subsidized and bought in bulk by local governments. Winteam’s products will increase to more than 500 from 327 with the deal and it will gain Xianling Gubao, a government-approved osteoporosis treatment that’s a “solid sales driver,” the company said. The drugmaker will also own seven exclusive products on the government’s 2012 essential list when the transaction is complete.
Winteam will resume trading in Hong Kong on May 27, ending a suspension that started on May 13 pending the announcement. The stock fell 1.3 percent to HK$3.38 on on May 10, giving it a gain this year to 139 percent.
The Hong Kong-based company plans to change its name, subject to shareholder approval, to China Traditional Chinese Medicine Co. to better reflect the nature of the expanded company. according to yesterday’s filing.
Winteam said the deal will be completed at the Hong Kong dollar equivalent of 2.64 billion yuan, including the assumed debt, with an upper limit of HK$3.4 billion and a lower limit of HK$3.2 billion.
It will pay 67.9 percent of the purchase price to Hanmax Investment Ltd., a company owned by Wang Xiaochun, in the form of 334 million new shares, the assumed debt and cash. It will pay 32.1 percent of the purchase price in cash to Fosun Industrial Co., a unit of Shanghai Fosun Pharmaceutical Group Co. (2196)
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