BioPharm Asia announced today that it is negotiating to acquire a controlling interest in Hubei Holley Zhengyuan Pharmaceutical Company Limited (HBHLZY). HBHLZY, founded in November, 2004, is a wholesale distributor of pharmaceutical products, located at the CBD of Wuhan city, Hubei province. HBHLZY's facilities consist of packaging equipment and a logistical management system. HBHLZY sells 4580 types of products, from 652 suppliers in China and in particular, Hubei province. HBHLZY also acts as a sales agent for over 2000 types of products, including products from Shenzhen SanJiu Pharmaceutical Co., Ltd. and Shenzhen Zhijun Pharmaceutical Co., Ltd.
On March 25, 2011, China Northern Pharmacy Holding Group Limited, a wholly-owned subsidiary of BioPharm Asia, entered into an agreement to transfer all of the outstanding shares of its subsidiary Tonghua S&T Medical & Pharmacy Company Limited (PHARMACY), and its subsidiary Yunnan Silin Pharmaceutical Company Limited (Silin) to City Well International Limited for RMB 200 million, or approximately $30.5 million, based upon prevailing exchange rates.
PHARMACY is an operating company engaged in drug logistics and distribution in the People's Republic of China which as of December 31, 2010 owned and operated 360 retail drug stores. In addition, PHARMACY owns 100% of Silin, a PRC company which is engaged in the sale of medicine products to hospitals and pharmacy shops. Management of PHARMACY and Silin had expressed displeasure at being a public company and the Company determined that it was in the interests of the Company's shareholders to consummate the sale as described herein rather than continue the dispute with the disgruntled management and, potentially, lose the entire value of the operations of PHARMACY and Silin without receiving any compensation. It is anticipated that the closing of the transfer will occur on or before April 1, 2011.
Management of the Company will seek to apply the net proceeds of the transaction to the acquisition of one or more new businesses.