SHENZHEN, China, Aug. 4, 2011 /PRNewswire-Asia/ -- Global Pharm
Holdings Group, Inc. (OTCBB:GPHG) ("Global Pharm" or the
"Company"), a China-based growing
vertically integrated pharmaceutical company engaged in
pharmaceutical-related products distribution, and Traditional
Chinese Medicine ("TCM") herbs cultivation and processing business
through its subsidiaries in Anhui,
Jilin and Shandong provinces, today announced that, on
August 1, 2011, the Company entered
into a Share Purchase Agreement (the "Acquisition Agreement") with
each of eight shareholders (each a "Seller" and collectively the
"Sellers") and completed the acquisition. Pursuant to the
Acquisition Agreement, the Sellers agreed to sell and the Company
agreed to purchase the aggregate of 50,000 ordinary shares ("Sale
Shares") in Pacific Asia Pharm Investment Group Co., Limited, a
company incorporated and existing under the laws of the
British Virgin Islands ("Pacific
Asia Pharm"), representing the entire issued share capital of
Pacific Asia Pharm. The consideration for the Sale Shares is
US$42,000,000, to be paid in full by
Global Pharm by issuing the Consideration Shares (as defined under
the Acquisition Agreement) to the Sellers within 90 days after the
Closing Date (as defined under the Acquisition Agreement). The
number of the Consideration Shares to be issued to the Sellers
shall be equal to US$42,000,000
divided by the fair market value of Global Pharm's issued and
outstanding common stock as at the Closing Date, as determined by a
third-party valuer selected by Global Pharm at its discretion. With
the completion of this acquisition, Pacific Asia Pharm becomes a
wholly owned subsidiary of the Company.
On the date of the Acquisition Agreement, Global Pharm and the
Sellers also entered into a Share Pledge Agreement pursuant to
which the Sellers pledge 10% of the Consideration Shares to Global
Pharm to secure the Sellers' covenants and undertakings in relation
to Pacific Asia Pharm's financial performance for the financial
year ending December 31, 2011 as set
forth in the Acquisition Agreement.
Pacific Asia Pharm owns 100%
equity interest of Hong Kong Rich Fortune Chain Drugstores Assets
Management Co., Ltd. ("Rich
Fortune"), a Hong Kong
company who owns 100% equity interest of Guangzhou Hairui Xiexin
Investment Consulting Co., Ltd. ("Hairui Xiexin"). Hairui Xiexin
has entered into a number of contractual arrangements with
Guangdong Guo Yao Pharmaceutical Franchises Co., Ltd. ("GDGY") and
the shareholders of GDGY, pursuant to which Hairui Xiexin acts as
the management company for GDGY, a PRC company mainly engaged in
the business of managing and supplying retail drugstores and
franchised drugstores in Guangdong
province of PRC. With the completion of the acquisition, GDGY is
indirectly managed by the Company.
Based on the Wind Information statistics for 2009, the market
share of TCM herbal pieces products in Guangdong province accounted for approximately
RMB 4 billion, nearly 1/10 of its
total market shares in China, with
an increasing rate of 20% annually. On June
6, 2001, GDGY was incorporated in Guangzhou City, the capital city of
Guangdong province, under the law
of the PRC. As of June 2011, it
manages and supplies 1,234 chain drugstores in Guangdong province, ranked the largest
pharmaceutical franchise in number of opened stores in Guangdong province. GDGY manages and supplies
its chain drugstores through the Target Management Contract,
pursuant to which the manager of each store independently operates
its business and assumes the full responsibility of operating risk.
The drugstore manager shall either choose to purchase its goods
directly from GDGY, or pay a franchise fee to GDGY at a
pre-determined amount.
"Given GDGY's intensive retail sales channel coverage in
Guangdong province, and the
retailing management expertise of its employees, Pacific Asia Pharm
is an excellent addition to Global Pharm, extending our integrated
value chain into pharmaceutical retailing sector," stated Mr.
Yunlu Yin, Chief Executive Officer
of Global Pharm. "Combined with our strong goods purchase power and
high profit Traditional Chinese Medicine ("TCM") products
portfolio, the acquisition adds further value for our distribution
business segment and offers extensive retail channel for our
quality TCM herbs products obtained directly from our TCM business
entities in Bozhou City. This acquisition enhances Global Pharm's
competence as well as position in the rapid consolidating Chinese
pharmaceutical industry."
About Pacific Asia Pharm
Pacific Asia Pharm incorporated
in the British Virgin Islands on
April 8, 2010, controlled 100% equity
interest of Rich Fortune, a
Hong Kong holding company, was
incorporated on January 12, 2009
under the law of Hong Kong,
controlled 100% equity interest of Hairui Xiexin. Hairui Xiexin was
incorporated on June 3, 2011 under
the law of PRC. Effective on July 11,
2011, Hairui Xiexin entered into series of contractual
arrangements with GDGY and the shareholders of GDGY, pursuant to
wvhich Hairui Xiexin acts as the management company and operation
trustee for GDGY, and GDGY conducts the principal operations of the
business. The contractual agreements effectively transferred the
preponderance of the economic benefits of GDGY over to Hairui
Xiexin, and Hairui Xiexin assumed effective control and management
over GDGY.
About GDGY
GDGY, established on June 6, 2001,
engages in the business of managing its chain drugstores, and
supplying following products to its chain drugstores: TCM products,
biochemical medicine, biological products (excluding the vaccinum),
chemical medicine, antibiotic (date of expire of the above items:
November 10, 2014), medical devices
and instruments, prescription medicine and nonprescription
medicine, hygienic products, general merchandise and cosmetics. As
of June 2011, GDGY manages and
supplies up to 1,234 chain drugstores in Guangdong province, owns approximately 5,000
square meters (53,820 square feet) of GSP certified warehouse, and
distributes up to 6,000 types of products to its chain
drugstores.
About Global Pharm
Global Pharm Holdings Group, Inc., a growing integrated
pharmaceutical company, is engaged in pharmaceutical distribution,
Traditional Chinese Medicine (TCM) herb plantation, TCM herbal
pieces processing business in China. Headquartered in Shenzhen, Global Pharm operates its
pharmaceuticals distribution business through six subsidiaries,
operates its TCM herbs cultivation business through three
subsidiaries, and operates its herbal pieces processing business
through one subsidiary, located in Shandong, Anhui, and Jilin provinces. At March 31, 2011, Global Pharm owns GSP-certified,
modern logistics distribution centers totally occupying
approximately 237,400 square feet, manages over 9,000 inventory
products, and leases approximately 1,800 acres of herbal
cultivation land. The Company focuses on building regional
distribution channels, as well as local capillary sales network
with high-margin products portfolio. Currently, its sales network
covers Shandong, Jilin and Anhui provinces, as well as other developed
provinces in China. Global Pharm
intends to establish an integrated value chain in pharmaceutical
industry through strategic acquisitions within TCM production,
pharmaceutical distribution and retail sectors. Global Pharm
anticipates it will achieve a solid distribution capacity and
develop into a major rapid-growing and profitable pharmaceutical
company. For further information, please visit the Company's
corporate website at http://www.globalpharmholdings.com.
Forward-looking Statements
Certain statements set forth in this press release contain or
may contain forward-looking statements and information that are
based upon beliefs of, and information currently available to, our
management as well as estimates and assumptions made by our
management. Such statements reflect the current view of our
management with respect to future events and are subject to risks,
uncertainties, assumptions and other factors as they relate to our
industry, our operations and results of operations, plans for
future facilities, capital-expenditure plans and any businesses
that we may acquire. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the
U.S. federal securities laws, we do not intend to update any of the
forward-looking statements to conform them to actual results.
For
Additional Information Contact
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Global Pharm Holdings
Group, Inc.
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Ms. Susan Liu
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Phone: +86-755-3693-9373
(Shenzhen, China)
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Email: susanliu@globalpharmholdings.com
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SOURCE Global Pharm Holdings Group, Inc.