After being vetoed by the merger and reorganization committee of the CSRC, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) ( Beijing Aosaikang Pharmaceutical Co.Ltd(002755) ) plans to continue to promote the acquisition of 60% equity of Jiangsu weidekang Medical Technology Co., Ltd. (hereinafter referred to as “weidekang”). However, the above matters have changed again recently. On April 17, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) issued an announcement that the company received the notice from the counterparty and unilaterally requested to terminate the relevant agreement of this transaction, which has the risk of termination Beijing Aosaikang Pharmaceutical Co.Ltd(002755) said that if the two parties could not reach an agreement through consultation, the company would file a lawsuit on the matter and investigate its relevant legal liabilities.
counterparty’s unilateral request for termination
After more than one year of planning, the acquisition of 60% equity of weidekang by Beijing Aosaikang Pharmaceutical Co.Ltd(002755) m was unilaterally terminated by the counterparty.
On April 17, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) announced that the company received the notice from the counterparty and unilaterally requested to terminate the relevant agreement of this transaction Beijing Aosaikang Pharmaceutical Co.Ltd(002755) said that the company was communicating with the counterparty, but did not make substantive progress. If both parties fail to reach an agreement through negotiation, the company will file a lawsuit against its unilateral termination of this transaction as soon as possible and investigate its relevant legal liabilities. The above changes of the counterparty will lead to significant uncertainty whether the transaction can continue to advance, and there is a risk of termination of the transaction.
It is understood that Beijing Aosaikang Pharmaceutical Co.Ltd(002755) the acquisition began in April last year and has been exactly one year since. On April 14, 2021, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) announced that the company was planning to purchase a total of 60% equity of weidekang held by Changzhou beiruishi Enterprise Management Co., Ltd., Changzhou Yiyuan Enterprise Management Co., Ltd., Zhuang Xiaojin and Miao Donglin by issuing shares and paying cash.
Statistics show that weidekang is a high-tech enterprise specializing in the R & D, production and sales of medical devices in the field of digestive endoscopy. Beijing Aosaikang Pharmaceutical Co.Ltd(002755) focuses on the R & D, production and sales of products in the fields of anti peptic ulcer, anti-tumor, anti drug-resistant bacterial infection and chronic diseases Beijing Aosaikang Pharmaceutical Co.Ltd(002755) said that the acquisition will help Beijing Aosaikang Pharmaceutical Co.Ltd(002755) to improve and diversify its layout in the field of gastrointestinal diagnosis and treatment, and further increase its influence in subdivided fields. However, with the unilateral request of the counterparty to terminate this transaction, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) the above vision may fail.
Does the above behavior of the counterparty constitute a breach of contract? Lou Xiaoyun, a lawyer of Shanghai Oriental Cambridge law firm, said in an interview with the Beijing Business Daily that whether it constitutes a breach of contract and the specific liability for breach of contract depends on whether the two sides have signed a formal agreement and the specific contents of the agreement.
Xu Xiaoheng, an investment and financing expert, said that after being unilaterally terminated by the counterparty, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) this acquisition has great uncertain risks and may be regarded as bad by investors. In the secondary market, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) share price is also at a relatively low level. According to China stock market news, according to the statistics of post reversion, since August 6, 2020, the Beijing Aosaikang Pharmaceutical Co.Ltd(002755) share price has been fluctuating downward, with a cumulative decline of 49.28%. As of the closing on April 15, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) reported 10.6 yuan / share, with a total market value of 9.838 billion yuan.
Up to now, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) has not disclosed the performance of the company in 2021. However, in the first three quarters of 2021, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) operating revenue and net profit fell year-on-year. According to the financial data, in the first three quarters of 2021, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) realized an operating revenue of about 2.444 billion yuan, a year-on-year decrease of 9.93%; The corresponding attributable net profit was about 392 million yuan, a year-on-year decrease of 18.21%.
The reporter of Beijing Business Daily called Beijing Aosaikang Pharmaceutical Co.Ltd(002755) Secretary Office for an interview on the company’s related problems, but no one answered the phone.
was rejected by the merger and reorganization committee
It is worth noting that the above acquisition was rejected by the merger and reorganization committee of the CSRC. After being rejected, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) decided to continue to promote.
It is understood that on October 27, 2021, the M & a committee of the CSRC held the 27th working meeting of the M & a committee in 2021 to consider the issues of Beijing Aosaikang Pharmaceutical Co.Ltd(002755) issuing shares and paying cash to purchase assets. According to the audit results of the meeting, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) the issue of shares and the payment of cash for the purchase of assets were not approved.
According to the review opinions of the M & a committee, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) failed to fully disclose the impact of domestic and foreign industrial policy changes on the underlying assets, and there is great uncertainty in the future profitability, which is not in line with the provisions of Article 43 of the measures for the administration of major asset restructuring of listed companies.
Statistics show that weidekang’s overseas sales are faced with uncertainty risks brought by the new EU medical device rules and covid-19 epidemic, and domestic sales are faced with policy risks such as volume procurement, two ticket system and medical insurance fee control. At the same time, weidekang’s operating performance declined after deducting the mask business in 2020 and suffered a loss in the first quarter of 2021.
After being rejected, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) did not stop at this point. On November 20, 2021, Beijing Aosaikang Pharmaceutical Co.Ltd(002755) announced that the board of directors believed that the issuance of shares and the payment of cash to purchase assets were conducive to optimizing the industrial layout of the company, cultivating new profit growth points, improving the overall operating efficiency of the listed company and in line with the long-term interests of the company and all shareholders. After careful study, the board of directors of the company decided to continue to promote this transaction. According to the review opinions of the M & a committee, the company will cooperate with relevant intermediaries to further modify, supplement and improve the transaction plan and relevant application materials in combination with the actual situation of the company, and resubmit them to the CSRC for review after the relevant work is completed.
Lou Xiaoyun pointed out that the main reason why the CSRC’s M & a committee rejected the above matters was the future profitability of the acquisition target. In this case, the listed company is very likely to reduce the valuation of the target company, which may be the reason why the two parties failed to negotiate.
According to the draft disclosed before the meeting of Beijing Aosaikang Pharmaceutical Co.Ltd(002755) restructuring matters, the transaction price previously finalized was 834 million yuan. Under the final income method, the assessed value of all shareholders’ equity of weidekang was 1.391 billion yuan, an increase of 1.197 billion yuan or 617.61% compared with 194 million yuan of shareholders’ equity of the parent company after audit.
