Topsun Science and Technology, the nation's leading privately owned pharmaceutical firm, will extend the time limit on a deal to sell its over-the-counter cough and cold business to Bayer.
The German firm will buy the Topsun subsidiary for 1.264 billion yuan - the biggest sum paid by a foreign company for a domestic drug maker.
Topsun signed a supplementary deal with Bayer on Feb 29 to extend the previous agreement to June 30, it told the Shanghai Stock Exchange in a statement. The terms remain the same.
Topsun must provide Bayer with a preliminary financial report that shows sales of no less than 330 million yuan for 2007.
Meanwhile, Bayer needs to show Topsun the latest capital verification report and operating license for the new business.
Bayer signed the original agreement with Topsun's subsidiary Jiangsu Qidong Gaitianli Medicines Co Ltd to acquire the manufacturing facility, sales and distribution network of its over-the-counter cough and cold medicine in October 2006.
The brands that will be transferred to Bayer include White and Black cold medicine, Xiaobai and Xinli cough syrup.
The original agreement was valid for one year. But the Ministry of Commerce, China Securities Regulatory Commission and shareholders took a long time to approve the deal. It was finally cleared in October last year.
The two parties have also reportedly disagreed on the acquisition price, to be paid in US dollars, because of the appreciating renminbi.
In June last year, the renminbi was 8 to the US dollar, but it's now 7.1. Topsun will lose over 100 million yuan if the deal is calculated at the new exchange rate.
"The capital is expected to be used to help improve the financial status of the companies," Wang Xi, an analyst at Industrial Securities, said. Topsun announced a loss of 300 million yuan in net profit in 2007.
Guo Jiaxue, chairman of Topsun, said it will focus its core business on Chinese traditional medicine, anesthesiology and drugs to control mental illness.
Shares in Topsun Science and Technology fell 4.74 percent to close at 16.69 yuan yesterday.
(China Daily March 5, 2008)
