SHENZHEN, China, Nov. 1, 2010 /PRNewswire-Asia-FirstCall/ --
Tongjitang Chinese Medicines Company (NYSE: TCM) ("Tongjitang" or
the "Company"), a leading specialty pharmaceutical company focusing
on the development, manufacturing, marketing and selling of
modernized traditional Chinese medicine in China, today announced that it has entered
into a definitive agreement and plan of merger with Hanmax
Investment Limited ("Hanmax"), Fosun Industrial Co., Limited
("Fosun") and Tonsun International Company Limited ("Tonsun"), a
Cayman Islands exempted company
all of the outstanding shares of which are owned by Hanmax and
Fosun. Mr. Xiaochun Wang, Chairman
of the Company's board of directors, Chief Executive Officer of the
Company and the beneficial owner of approximately 51% of the
Company's outstanding ordinary shares, controls Hanmax. Fosun
beneficially owns approximately 32% of the Company's outstanding
ordinary shares.
Under the terms of the merger agreement, each ordinary share of
the Company (including shares represented by American Depositary
Shares, each of which represents four ordinary shares) issued and
outstanding immediately prior to the effective time of the merger,
other than the ordinary shares and ordinary shares represented by
American Depositary Shares owned by Hanmax, Tonsun and Fosun, will
be cancelled in exchange for the right to receive $1.125 (or $4.50
per American Depositary Share, not including the fees and expenses
of the ADS depositary) in cash without interest. The offer
represents a 13.6% premium over the closing price of $3.96 per American Depositary Share on
October 28, 2010, and a 14.8% premium
over the last month volume weighted average closing price of
$3.92 per American Depositary
Share.
The Company's board of directors, acting upon the unanimous
recommendation of a special committee of independent directors,
approved the merger agreement and resolved to recommend that the
Company's shareholders vote to adopt the merger agreement. The
special committee, which is composed solely of directors unrelated
to any of Tonsun, Fosun, Mr. Xiaochun
Wang and Hanmax, negotiated the terms of the merger
agreement with the assistance of its financial and legal
advisors.
"We believe this transaction provides the greatest likelihood
for achieving the highest value for the Company's shareholders, and
that this is also in the best interests of our customers, partners
and employees," said Justin Yan
Chen, the Company's Chief Operating Officer.
"After an extensive review of strategic alternatives by the
special committee and its financial advisors, we determined this
all cash sale of the Company is in the best interests of the
Company's shareholders," said Mr. Chen.
The merger contemplated by the merger agreement, which is
currently expected to close before the end of the first quarter
2011, is subject to the adoption of the merger agreement by a
majority in number of the holders of the Company's ordinary shares
representing at least 75% in value of the total issued ordinary
shares of the Company present and voting in person or by proxy as a
single class at a shareholders' meeting duly called and held for
such purpose, as well as certain other closing conditions. Mr.
Xiaochun Wang and Fosun, which
together beneficially own approximately 83% of the Company's
outstanding issued shares, have agreed to vote to adopt the merger
agreement. CITIC Bank International Limited ("CITIC") and Hanmax
have entered into a facility agreement pursuant to which CITIC has
agreed to provide financing for the transaction, subject to certain
conditions. The Company will schedule a meeting of its shareholders
for the purpose of voting on the adoption of the merger agreement.
If completed, the merger will, under Cayman Islands laws, result in the Company
becoming a privately-held company and its American Depositary
Shares would no longer be listed on The New York Stock
Exchange.
Morgan Stanley Asia Limited is serving as financial advisor to
the special committee. Sheppard, Mullin, Richter & Hampton LLP
is serving as U.S. legal advisor to the special committee and Thorp
Alberga is serving as Cayman
Islands legal advisor to the special committee. Baker &
McKenzie is serving as U.S. legal advisor to Tonsun, Hanmax and
Fosun, and Conyers Dill &
Pearman is serving as Cayman
Islands legal advisor to Tonsun, Hanmax and Fosun.
Additional Information About the Transaction
The Company will furnish to the Securities and Exchange
Commission (the "SEC") a report on Form 6-K regarding the
transaction, which will include the merger agreement and related
documents. All parties desiring details regarding the transaction
are urged to review these documents, which are available at the
SEC's website (http://www.sec.gov).
In connection with the proposed merger, the Company will prepare
and mail a proxy statement to its shareholders. In addition,
certain participants in the proposed transaction will prepare and
mail to the Company's shareholders a Schedule 13E-3 transaction
statement. These documents will be filed with or furnished to the
SEC. SHAREHOLDERS ARE URGED TO READ THESE MATERIALS AND OTHER
MATERIAL FILED WITH OR FURNISHED TO THE SEC CAREFULLY WHEN THEY
BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE COMPANY, THE PROPOSED MERGER AND RELATED MATTERS. In addition
to receiving the proxy statement and Schedule 13E-3 transaction
statement by mail, shareholders also will be able to obtain these
documents, as well as other filings containing information about
the Company, the proposed merger and related matters, without
charge, from the SEC's website (http://www.sec.gov) or at the SEC's
public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these
documents can be obtained, without charge, by contacting the
Company at the following address and/or phone number:
Tongjitang Chinese Medicines Company
5/F Blk B, Nanshan Medical Device Park
1019 Nanhai Avenue, Nanshan District
Shenzhen, Guangdong 518067
Fax: (86-755) 2689 1529
The Company and certain of its directors, executive officers and
other members of management and employees may, under SEC rules, be
deemed to be "participants" in the solicitation of proxies from our
shareholders with respect to the proposed merger. Information
regarding the persons who may be considered "participants" in the
solicitation of proxies will be set forth in the proxy statement
and Schedule 13E-3 transaction statement relating to the proposed
merger when it is filed with the SEC. Information regarding certain
of these persons and their beneficial ownership of the Company's
ordinary shares as of June 29, 2010
is also set forth in the Company's Form 20-F, which was filed with
the SEC on June 30, 2010. Additional
information regarding the interests of such potential participants
will be included in the proxy statement and Schedule 13E-3
transaction statement and the other relevant documents filed with
the SEC when they become available.
This announcement is neither a solicitation of proxy, an offer
to purchase nor a solicitation of an offer to sell any
securities.
Forward-Looking Statements
Statements about the expected timing, completion and effects of
the proposed merger, and all other statements in this press release
other than historical facts, constitute forward-looking statements
within the meaning of the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on these forward-looking
statements, each of which is qualified in its entirety by reference
to the following cautionary statements. Forward-looking statements
speak only as of the date hereof and are based on current
expectations and involve a number of assumptions, risks and
uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. A number of
the matters discussed herein that are not historical or current
facts deal with potential future circumstances and developments, in
particular, whether and when the transactions contemplated by the
merger agreement will be consummated. The discussion of such
matters is qualified by the inherent risks and uncertainties
surrounding future expectations generally, and also may materially
differ from actual future experience involving any one or more of
such matters. Such risks and uncertainties include: any conditions
imposed on the parties in connection with consummation of the
transactions described herein; adoption of the merger agreement by
our shareholders; satisfaction of various other conditions to the
closing of the transactions described herein; and the risks that
are described from time to time in our reports filed with the SEC,
including our Form 20-F for the year ended December 31, 2009. This press release speaks only
as of its date, and we disclaim any duty to update the information
herein.
About Tongjitang Chinese Medicines Company
Tongjitang Chinese Medicines Company, through its operating
subsidiaries Guizhou Tongjitang Pharmaceutical Co. Ltd., Guizhou
Long-Life Pharmaceutical Co. Ltd., Qinghai Pulante Pharmaceutical
Co. Ltd. and Anhui Jingfang Pharmaceutical Co. Ltd., is a
vertically integrated specialty pharmaceutical company focused on
the development, manufacturing, marketing and selling of modernized
traditional Chinese medicine in China. Tongjitang's principal executive
offices are located in Shenzhen,
China.
Tongjitang's flagship product, Xianling Gubao, is the leading
traditional Chinese medicine for the treatment of osteoporosis in
China as measured by sales in
Renminbi. In addition to Xianling Gubao, the Company manufactures
and markets 35 other modernized traditional Chinese medicine
products and 36 western medicines. Please visit www.tongjitang.com
for more information.
For more information, please contact:
ICR, Inc.
Ashley M. Ammon or Christine Duan
Phone: +1-203-682-8200 (Investor Relations)
SOURCE Tongjitang Chinese Medicines Company