Source: Baidu

Specifically, SIIC Medical Science and Technology (Group) Ltd. (SIIC), wholly-owned subsidiary of Shanghai Pharm, will acquire Vitaco jointly with PV Zeus Limited (Zeus), wholly-owned subsidiary of Primavera Capital Fund II L.P. (Primavera, a global institutional investor founded in 2010). The purchase price will be set at USD1.70 (AUD2.25) per share, in total:

• Shanghai Pharm: funding USD142.19 million (AUD188.00 million) for 60% of the shares

• Primavera: funding USD94.54 million (AUD125.00 million) for 40% of the shares

* Exchange rate: USD1.00=AUD1.3222, source from the People’s Bank of China on 27 Aug., 2016.

Additionally, SIIC, Zeus and Primavera also signed a Shareholders Agreement to establish a joint venture (SIIC holds 60% of the shares and Zeus 40%) in Hong Kong which will act as the executor in the privatisation of Vitaco.

Vitaco began as a healthcare company in 2007 as the merge of Healtheries of New Zealand Limited (a manufacturer of comprehensive healthcare food & supplements founded in 1904) and Nutra-Life Health Products, Inc. (a producer of supplement and sports nutrition founded in 1967 in New Zealand). The company was registered in Victoria, Australia and got listed on the Australian Stock Exchange (ASX) on 16 Sept., 2015, stock price set at USD1.59 (AUD2.10) in the initial public offering.

The company is mainly engaged in the R&D, production and sale of healthcare products, sports nutrition and healthcare food. Its products are mainly sold in Australia and New Zealand. Additionally, its Healtheries series and Musashi series are available to the Chinese market directly through E-commerce platform and indirectly through Chinese dealers in Australia and New Zealand. In H1 2016, Vitaco generated a total revenue of USD8.71 million (AUD11.52 million) from the Chinese market (through direct and indirect sales channels).

Shanghai Pharm is one of the few listed domestic enterprises that take a leading position in both pharmaceutical production and distribution. In the whole of 2015, its total revenue achieved USD15.92 billion (RMB105.50 billion).

Through the acquisition of Vitaco, Shanghai Pharm aims to break into the healthcare industry, hunt for new sources of profits and in the meantime, expand its business layout and development in the international market in accordance with its development strategy. The cooperation between the two parties is favorable for resource complementarity and synergy so as to create healthcare product mix and knockout products that can be put into mass production, given Shanghai Pharm’s rich online and offline marketing channels as well as Vitaco’s high-quality products.

However, Shanghai Pharm also pointed out some risks in this acquisition:

1. Whether this acquisition can be achieved remains to be seen. This is mainly given the fact that this transaction still needs approvals from directors in Shanghai Pharm, Australian Securities and Investment Commission, Foreign Investment Review Board, New Zealand’s Overseas Investment Office and the board of directors in Vitaco, as well as a hearing in the court in Australia.

2. Vitaco may face risks from changes in China’s regulations on cross-border E-commerce

3. There may be potential risks brought by intensified competition in sports nutrition industry and changes in consumers’ habits and preferences.

This article comes from Vitamins China E-News 1608, CCM

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

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Tag: vitamins  healthcare

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