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Viva to acquire Langhua
Posted on Thursday, 21 May 2020 09:31
Viva Biotech Holdings wants to turn Zhejiang Langhua Pharmaceutical into the group’s sole contract development and manufacturing organisation for small molecule drugs and advanced intermediates.
The company is acquiring a 60.0 per cent stake for CNY 1.61 billion (USD 226.46 million) to further strengthen and diversify its drug research capabilities to better service its clients and boost market competitiveness.
Viva said it is carrying out the deal based on an arm’s length valuation of USD 2.68 billion for the whole of Langhua.
The figure was derived from the unaudited net profit for the soon-to-be subsidiary of CNY 91.40 million for 2019 and a guarantee that the bottom line will not be less than CNY 140.00 million for 2020.
Viva is expected to pay 80.0 per cent of the consideration once the deal has obtained shareholder approval.
The Cayman Islands-incorporated integrated medicine discovery platform will hand over the balance within five days after Langhua issues its audited report for 2020, due before the end of March 2021.
It noted it also intends to promote the potential listing of the Chinese CDMO/contract manufacturing organisation on an A share market in China.
However, if Langhua fails to be admitted to trading within five years of the definitive agreement, Viva has the right to acquire the remaining 40.0 per cent of for CNY 1.07 billion in cash.
Viva said in its annual report for 2019 the scale and outsourcing of early-stage drug discovery service segment is continuously increasing.
This means the market is well positioned for a compound annual growth rate of 37.3 per cent for the next three years.
Viva generated revenue of CNY 323.06 million in the 12 months ended 31st December 2019 and booked net profit of CNY 265.87 million.
As at 31st December 2019, the group had gearing of 6.4 per cent, compared to 52.5 per cent at the end of December 2018.
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