NEW YORK, April 24 /PRNewswire-FirstCall/ -- China Aoxing Pharmaceutical Company, Inc. (OTC Bulletin Board: CAXG - News), one of the first non-governmental enterprises to enter the analgesic industry in China, today announced that it has signed a Letter of Intent to acquire Shijiazhuang Le Ren Tang Pharmaceutical Ltd ("LRT"). LRT is a pharmaceutical company organized under the laws of China specializing in the manufacturing and distribution of modernized Chinese traditional medicines, with a strong portfolio of pain management products. The Letter of Intent contemplates that CAXG will acquire 100% ownership of LRT. The purchase price is approximately $10 million (or two times total LRT product sales in 2006, depending on the final audited financial statements). The purchase price will be paid 50% in cash and 50% in shares of the Company's common stock valued at $4 per share. Completion of the transaction is expected to occur in the third quarter of 2007. Completion, however, is subject to a number of conditions, including execution of a final purchase agreement and receipt of approval from the Chinese government. The transaction is expected to become accretive upon closing.
LRT, based in Shijiazhuang City, Hebei Province, China, was founded in 1935. The Company currently has 127 SFDA-approved products in its portfolio and has developed a rich line of pain management drugs in pills, tablets, capsules, oral solutions and other formulations. LRT's best selling product is the Zhong Tong An Capsules, an effective pain medicine developed solely by LRT to relieve dental pain, sore throats and oral ulcers, that accounted for approximately 50% of LRT's total revenue in 2006. LRT currently has 52 products listed in the first and second classes of the National Medical Insurance Program, and 101 products entered in the national OTC medicine book. In 2004, LRT passed GMP production certificates for all of its production lines.
"We are excited to add Le Ren Tang to the Aoxing family and believe this acquisition will further support our position as a leading, diversified pain management products company," commented Zhenjiang Yue, Chairman and CEO of China Aoxing. "Our acquisition of LRT will allow us to execute a key part of our business strategy by acquiring an established brand, profitable business, and synergistic product portfolio with significant commercialization value. Le Ren Tang has a number of high value pain management products, including its flagship product, Zhong Tong An Capsules, that have not reached their full market potential."
Mr. Yue continued, "Once this acquisition is completed, we plan to quickly ramp up and optimize production of LRT's most promising products as well as rejuvenate its existing sales and marketing organization. We also believe this acquisition will be synergistic as it will allow China Aoxing to better utilize operating resources and achieve efficiencies for new product launches expected in our business over the course of the next 12 to 18 months. We look forward to the many benefits associated with this acquisition and believe it will provide us with a strong platform for sales and profitability growth in the future."
About China Aoxing Pharmaceutical Group
China Aoxing Pharmaceutical Company, Inc. (OTC Bulletin Board: CAXG - News) acquired Hebei Aoxing Pharmaceutical Group Co. Ltd in a reverse merger transaction in April of 2006. Hebei Aoxing Pharmaceutical Group is a corporation organized under the laws of the People's Republic of China that has developed a patented manufacturing process for a variety of generic analgesic drugs, including Oxycodone, Pholcodine, Naloxone, and Tilidine. Hebei Aoxing is one of only a handful of companies in China to be granted the license to manufacture these drugs and is working closely with the Chinese government to assure their availability throughout China.
Safe Harbor Statement
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. You are urged to read the Company's filings with the Securities and Exchange Commission, including, but not limited to, the risk factors contained therein. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Dr. Hui Shao
Senior Vice President
China Aoxing Pharmaceutical
Ashley Ammon MacFarlane & Bill Zima
Integrated Corporate Relations, Inc.
Source: China Aoxing Pharmaceutical Company, Inc.
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