Drug firm in sights of China Resources
State group to make pharmaceuticals business its new earnings driver
State-owned conglomerate China Resources (Holdings) is in talks to buy out the country's top drugmaker Sanjiu Enterprise Group as it aims to make pharmaceuticals its new earnings driver.
'We're seeking to buy 100 per cent of Sanjiu,' president Charley Song Lin said.
China Resources planned to merge Sanjiu with its existing drug business, including newly acquired China Worldbest Group, another mainland drugmaker, Mr Song said.
Mr Song did not disclose the value of the possible deal but denied a previous mainland newspaper report that it might jointly restructure the medicine maker with Deutsche Bank.
Last week, the 21st Century Business Herald cited sources as saying that China Resources was offering 3.9 billion yuan for 70 per cent of Sanjiu, which makes products under the well-known '999' brand in the mainland.
According to Xinhua, the State-owned Assets Supervision and Administration Commission had initially selected China Resources as the strategic investor of the debt-laden Sanjiu.
Chairman Chen Xinhua said China Resources, whose businesses range from infrastructure to property, retail, cement, beer and semiconductors, aimed at more than doubling its total assets, turnover and operating profit by 2013. The medicine, property, infrastructure and retail sectors would be the main earnings drivers, he said.
The group's targets are HK$289.5 billion in total assets by 2013 from HK$135.2 billion in 2005, HK$208.5 billion in turnover from HK$75.3 billion and HK$20.2 billion in profit from HK$5.97 billion.
China Resources made investments of HK$97.9 billion between 2001 and last year, 46 per cent of which were in infrastructure and utilities, 28 per cent in property and related business, 22 per cent in consumer and retail business, and 4 per cent in other industries.
Mr Chen said the group's medical and pharmaceutical business development was still at an early stage but the acquisition of Worldbest and Sanjiu would create 'a very good platform' for further development.
China Resources, the controlling shareholder of Hong Kong-listed China Resources Enterprise, China Resources Logic and China Resources Land, posted a 20 per cent increase in profit before tax last year to HK$12.3 billion on turnover of HK$169.7 billion.
The group is planning to issue one billion yuan 15-year corporate bonds in the mainland this year to help fund its expansion after issuing seven billion of such long-term debt over the past two years.
