Beijing Med-Pharm Corporation has reached a definitive agreement with the owners of Sunstone Pharmaceutical to acquire a minority interest in the company. Sunstone is a privately held manufacturer of primarily over-the-counter (OTC) medicines, with operations in Tangshan, Hebei Province in People's Republic of China.
Under the terms of the agreement, Beijing Med-Pharm will acquire 49 percent of the issued share capital of Hong Kong Fly International Health Care Limited, a Hong Kong corporation that holds a 100 percent equity interest in Sunstone, for $32 million. Beijing Med-Pharm will make an initial payment of $4.8 million within five days of signing the agreement. The conditions of the transaction include the restructuring of the Board of Directors of Sunstone to permit Beijing Med-Pharm to appoint two of the five members. The company also revealed that because Sunstone is privately owned and the transaction will take place in Hong Kong, Chinese government approval is not required. The transaction is expected to close in the third quarter of 2007.
Mr David Gao, CEO of Beijing Med-Pharm believes that this joint venture with Sunstone will enable both the companies to maximize the value of cross-promotion opportunities between the hospital and retail pharmacy segments of their businesses. Beijing Med-Pharm will take advantage of Sunstone's distribution infrastructure and manufacturing capabilities.