Summary: On 22 March, 2022, Star Lake Bioscience announced that it planned to trade with Guangxin Group and Eppen Investment for Eppen Biotech.
On 22 March, 2022, Star Lake Bioscience Co, Inc. Zhaoqing Guangdong (Star Lake Bioscience) announced that it was prepared to purchase 99.22% equity of Ningxia Eppen Biotech Co., Ltd. (Eppen Biotech) held by Guangdong Guangxin Holdings Group Ltd. (Guangxin Group) and Ningxia Eppen Investment Group Co., Ltd. (Eppen Investment) etc. by issuing shares and paying cash, and intended to issue shares to eligible specific investors to raise supporting funds.
Transaction purposes:
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Upon completion of this transaction, Star Lake Bioscience's products will be further enriched, and its business scale and profitability will be fundamentally improved, which is conducive to building a leading enterprise in the field of bio-fermentation. Besides, Star Lake Bioscience and Eppen Biotech can extend their original industrial chain, realize vertical integration and give play to synergies between businesses.
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Fulfilling synergies between Star Lake Bioscience and Eppen Biotech
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Under the background of continuous integration of subdivided industries, Star Lake Bioscience's market position and competitiveness face the risk of being gradually marginalised for a long time as its business scale and product layout are difficult to achieve fundamental improvement by its own development.
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For Eppen Biotech, its timely expansion of production capacity and further enrichment of product layout all require resource investment and financial support. However, due to the lack of strategic resources and limited financing channels, its existing platform has been difficult to fully support its further expansion of competitive advantages in the global market.
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Both Star Lake Bioscience and Eppen Biotech are food & feed additives manufacturers with bio-fermentation as their core technology. And there are many commonalities in their production operation, marketing, raw material procurement and technology research and development. Therefore, the two companies have a strong basis for resource integration.
Table Eppen Biotech's main financial figures in 2021, million USD
|
Item
|
2021
|
2020
|
YoY change
|
|
Operating income
|
2,327.18
|
1,758.53
|
32%
|
|
Operating profit
|
78.38
|
18.41
|
326%
|
|
Net profit
|
58.06
|
13.15
|
341%
|
|
Net cash flow from operating activities
|
42.33
|
124.07
|
-66%
|
|
Item
|
As
of 31 Dec., 2021
|
As
of 31 Dec., 2020
|
YoY
change
|
|
Assets
|
1,905.36
|
1,829.53
|
4%
|
|
Liabilities
|
1,210.36
|
1,228.03
|
-1%
|
Source: Eppen Biotech & CCM
Established in April 1992 with a registered capital of USD117.28 million (RMB739.02 million), Star Lake Bioscience mainly engages in food additives, chemical APIs and pharmaceutical intermediates.
Founded on 5 Aug., 2003 with a registered capital of USD78 million (RMB491.52 million), Eppen Biotech has wholly-owned subsidiaries such as Inner Mongolia Eppen Biotech Co., Ltd., Heilongjiang Eppen Biotech Co., Ltd., etc. In 2020, Eppen Biotech and its subsidiaries had a production capacity of about 860,000 t/a lysine, 268,000 t/a threonine and 420,000 t/a monosodium glutamate, ranking first, third and third worldwide respectively.
Table Eppen Biotech's ownership structure
|
No.
|
Shareholder
|
Shareholding ratio
|
|
1
|
Guangdong Guangxin Holdings Group Ltd.
|
43.78%
|
|
2
|
Ningxia Eppen Investment Group Co., Ltd. & related parties
|
39.49%
|
|
3
|
Others
|
16.73%
|
|
Total
|
100%
|
Source: CCM
More information can be found at CCM Amino Acid China Monthly Report.
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