Acquisition of prescription drug group Furen Pharmaceuticals to re-open the "snake swallowing elephant"

On November 13th, Furen Pharmaceuticals announced that it intended to purchase a 100% stake in Kaifeng Pharmaceutical Group (hereinafter referred to as the "Prescription Group") held by 14 trading parties, including Furen Pharmaceutical Group Co., Ltd., by issuing shares and paying cash. And to no more than 10 qualified specific objects of non-public issue of shares supporting the raising of funds, the total amount does not exceed 5.3 billion yuan.
Furen Pharmaceuticals intends to issue shares to Furen Group, Ping Jiaxin Yuan, Zincheng Yu Pharmaceuticals, Wanjia Xinwang, Dingliang Kaiyao, Crete, Everest Keystone, Leading Keystone, Jincheng Toxin, Dong Tu Datang, Dong Tutaiyao, Peizi Investment, Ocean Keystone, Central European Keystone 14 trading parties to issue shares and pay cash to buy shares in the Pharmaceutical Group, at a transaction price of 7.809 billion yuan.
Furen Pharmaceuticals said that through this transaction, the company intends to acquire Furen Group's pharmaceutical group, and through the pharmaceutical group to acquire Furen Group's biopharmaceutical research and development company, the company will become a business covering chemical drugs, traditional Chinese medicine, api materials, biopharmaceuticals, large-scale integrated pharmaceutical listed companies platform, basically realize the overall listing of Furen Group's core pharmaceutical assets. After the completion of this transaction, the company's main business from a relatively single Traditional Chinese medicine business to a comprehensive pharmaceutical business, will significantly enhance the listed company's ability to resist risks, expand the future development space.
According to the consolidated audited financial statements of the Pharmaceutical Group, as of December 31, 2016, the total assets of the Pharmaceutical Group were RMB7,515 million, and the owner's equity attributable to shareholders of the parent company was RMB3.852 billion; As of the end of 2016, Furen Pharmaceuticals had total assets of 1,273 million yuan and owner's equity attributable to shareholders of the parent company of 369 million yuan. For the whole of 2016, Furen Pharmaceuticals achieved revenue of RMB496 million and net profit of RMB17.6567 million. Both are undoubtedly "snake swallowing elephants" in terms of mass.
Pharmaceuticals, which is struggling to operate in the hope of acquiring The Drug Group, is also due to the profitability of the Pharmaceutical Group. In 2006, Furen Group completed the listing of its Chinese medicine assets by transferring its equity to become the controlling shareholder of Furen Pharmaceuticals and injecting FurenTang into Furen Pharmaceuticals. On the other hand, also belongs to the Furen Group's prescription group, after years of accumulation and expansion, has developed into a collection of chemical drugs, raw materials research and development, production and sales of integrated large-scale pharmaceutical enterprises. In other words, this asset in terms of operating capacity and scale, has been far larger than the listed company Furen Pharmaceuticals. Injecting pharmaceutical groups into listed companies can enhance the profit margins of listed companies.
the same time, the acquisition of the pharmaceutical group, but also to solve the problem of mutual competition between Furen Pharmaceuticals and Furen Group has been there. When the shell was listed in 2006, Furen Pharmaceuticals promised to solve the problem of competition in the industry, that is, Furen Pharmaceuticals produced Chinese medicine, Furen Group is mainly responsible for the production of Western medicine. In fact, however, companies owned by the Furen Group, such as the Pharmaceutical Group, are still producing Chinese medicine. After the completion of the merger and acquisition, the problem of competition in the industry will be solved, and the management and business model of Furen Pharmaceuticals will tend to be unified.
2015, Furen Pharmaceuticals had planned to buy the drug group but failed to do so. In September 2016, Furen Pharmaceuticals announced that it had decided to apply to the CSRC to suspend the review of this major asset restructuring matter. According to Furen Pharmaceuticals' announcement at the time, the company also received a warning letter from the Henan Securities Regulatory Bureau for the breach. During the restructuring period, Furen Pharmaceuticals was also repeatedly questioned by the SFC on related restructuring matters. The industry believes that now that mergers and acquisitions restart, Furen Pharmaceuticals should have been prepared for the problems that have arisen before, the possibility of successful mergers and acquisitions is greater. (Beijing Business Daily)