American Oriental Bioengineering Completes Two Acquisitions
October 21 2008 - 3:01PM
PR Newswire (US)
Terminates Prior LOI and Acquires Profitable Holding Company to
Strengthen Distribution Network and Retail Presence Acquires
Research and Product Development Company to Expedite Product
Launches Conference Call Scheduled for October 22, 2008 at 8:00 am
E.T. NEW YORK, Oct. 21 /Xinhua-PRNewswire-FirstCall/ -- American
Oriental Bioengineering, Inc. (NYSE:AOB) ("AOBO"), a leading
marketer and manufacturer of pharmaceutical and healthcare products
in China, today announced that it has completed the acquisition of
Nuo Hua Investment Company Ltd. ("Nuo Hua"), as well as the
acquisition of GuangXi HuiKe Research and Development Company Ltd.
("GHK"), in cash transactions totaling $53.1 million. Nuo Hua is a
holding company with subsidiaries and affiliated companies that
maintain a significant presence in pharmaceutical wholesale and
retail distribution in China. AOBO acquired Nuo Hua for $39.5
million after terminating a previously announced, non-binding
Letter of Intent to acquire another company in the distribution
industry in China, as discussed below. GHK is engaged in
pharmaceutical research and product development leading to SFDA
approval and expedient product launches in China. The acquired
companies are profitable and AOBO believes that the acquisitions
will significantly enhance AOBO's distribution platform and product
launch capabilities, particularly for new product launches starting
in 2009. Tony Liu, Chief Executive Officer of American Oriental
Bioengineering stated, "We are very pleased to acquire Nuo Hua and
GHK and today's announcement represents a major step toward
achieving our goal of becoming one of China's top pharmaceutical
companies. Nuo Hua provides us with a diverse range of incremental
wholesale and retail distribution opportunities, such as in new
top-tier hospitals and rural areas, both of which bolster our
long-term growth capabilities. GHK lends the innovation we need to
bring new products to market quickly and effectively, and brings us
several existing patents, a fantastic team of product specialists,
and industry know-how in China's complex pharmaceutical
registration process." Liu continued, "The combination of Nuo Hua
and GHK together is particularly exciting because we can leverage
new product development across our enhanced wholesale and retail
distribution network, which, through Nuo Hua, now covers major
top-tier (Class II and Class III) hospitals in Northern China,
additional provincial and municipal hospitals, lower level
distributors and retail chain pharmacies throughout the country. As
a result of these two transactions, we anticipate at least three
new product launches next year and at least ten in 2010. Each of
these products targets an addressable market size of at least $200
million annually. We look forward to building on our proven
marketing skills with a more robust product pipeline and a more
formidable distribution presence going forward." Nuo Hua Investment
Company, Ltd. Nuo Hua Investment Company Ltd. ("Nuo Hua"), through
its subsidiaries and affiliate companies, distributes more than
6,000 pharmaceutical products through an extensive sales network
covering major urban and rural areas in China. Nuo Hua's
distribution platform covers major top-tier (Class II and Class
III) hospitals in Northern China, and also includes provincial and
municipal hospitals, lower level distributors and retail chain
pharmacies throughout the country. Nuo Hua has achieved a compound
annual revenue growth rate of more than 30 percent since fiscal
2006. In 2009, AOBO anticipates that it will consolidate revenue
from Nuo Hua of approximately $80 million and net income of $2.3
million. AOBO entered into an acquisition agreement to acquire Nuo
Hua for approximately $39.5 million in cash after terminating a
previously announced, non-binding Letter of Intent to acquire
another company in the distribution industry in China. Management
believes that acquiring Nuo Hua instead of the other company was a
more efficient use of cash, allowed AOBO to acquire compelling
distribution assets at a lower price, and also allowed AOBO to
conserve cash for future acquisitions and growth plans. GuangXi
HuiKe Research and Development Company Ltd. GuangXi HuiKe ("GHK")
is engaged in pharmaceutical research and product development
leading to SFDA approval and expedient product launches in China.
The Company employs 22 professionals and provides research and
development through innovative technology, raw material selection,
extraction and production of pharmaceutical products. The Company
also has a dedicated focus on navigating the new drug approval and
launch process in China, and has completed over 60 development
projects over the past few years, including obtaining new drug
production licenses, approvals for clinical trials, and technology
patents. AOBO acquired GHK for $13.6 million in cash. The monetary
exchange rate used for these transactions was US$1.00: RMB 6.83.
Conference Call The Company will hold a conference call at 8:00 am
ET (8:00 pm China Time) on Wednesday, October 22, 2008, to discuss
the acquisitions of Nuo Hua and GHK. Listeners may access the call
by dialing the following numbers: United States toll free:
+1-866-316-1368, International: +1-913-312-0845, Northern China
toll free: +10-800-714-0970, Southern China toll free:
+10-800-140-0945. A webcast will also be available on the Company's
website at http://www.bioaobo.com/ . A replay of the call will be
available through October 29, 2008. Listeners may access the replay
by dialing 1-888-203-1112 or 1-719-457-0820 for international
callers, access code: 4634165. About American Oriental
Bioengineering Inc. American Oriental Bioengineering Inc. is a
pharmaceutical company dedicated to improving health through the
development, manufacture and commercialization of a broad range of
prescription and over the counter products in China. Statements
made in this press release are forward-looking and are made
pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. Such statements involve risks and uncertainties
that may cause actual results to differ materially from those set
forth in these statements. The economic, competitive, governmental,
technological and other factors identified in the Company's filings
with the Securities and Exchange Commission, including the Form
10-K for the year ended December 31, 2007 and the Form 10-Q for the
quarter ended June 30, 2008, may cause actual results or events to
differ materially from those described in the forward looking
statements in this press release. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether because of new information, future events, or
otherwise. DATASOURCE: American Oriental Bioengineering, Inc.
CONTACT: Lily Li, Chief Financial Officer at +86-10-5982-2038; or
Ashley M. Ammon, Integrated Corporate Relations at +1-203-682-8208
for AOB Web site: http://www.bioaobo.com/
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