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Shanghai Pharma Denies Probe Report, Says Deals Complied

May 24 (Bloomberg) -- Shanghai Pharmaceuticals Holding Co. hasn’t received any notice of a probe by regulators in mainland China or Hong Kong, the company said in a response to a newspaper report that had caused its shares to plunge.

The company complied with rules in making acquisitions, and its accounts and those of its units comply with standards, it said in a Hong Kong stock exchange filing yesterday. The stock dropped 24 percent in Hong Kong yesterday, the biggest decline since its May 2011 debut.

The 21st Century Business Herald reported that Shanghai Pharma is being investigated by the Hong Kong Stock Exchange and China Securities Regulatory Commission for suspected financial fraud involving two acquisitions earlier this year, citing a company executive it didn’t identify.

Shanghai Pharma said it completed the acquisition of 70 percent of Changzhou Kony Pharma Co., and the consolidation of Kony’s accounts into its first-quarter report met standards. The acquisition of the intangible assets of Shanghai Asia Pioneer Pharmaceutical Co. is “fair and reasonable” and complies with regulatory requirements, Shanghai Pharma said.

Shanghai Pharma plunged by HK$2.93 yesterday to close at HK$9.11 in Hong Kong. In Shanghai, the shares fell 10 percent, the exchange-imposed daily limit, to 10.75 yuan.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net; Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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