June 28, 2007

Legend Holdings acquires China's Shijiazhuang Pharmaceutical Group

In an agreement signed on June 16, Shijiazhuang's Municipal State-owned Assets Supervision and Administration Commission formally transferred its ownership of Shijiazhuang Pharmaceutical Group Co Ltd (SPG) to Legend Holdings, parent company of Lenovo.

With this RMB870-million acquisition, which is RMB30 million more than the initial minimum price set by SPG, pharmaceuticals will now be the second largest core asset owned by Legend Holdings, beside its well-established IT arm.

According to the evaluation report of SPG by the State-owned Assets Supervision and Administration Commission, the total assets, debt and net assets of SPG were at RMB2.19 billion, RMB1.35 billion and RMB840 million respectively. In 2006, total revenue and profit of SPG were at RMB3.96 billion and RMB51 million respectively.

"China's pharmaceutical industry has immense potential, but enterprises are still quite small and the industry is highly fragmented. There is a good likelihood of more consolidation in the market," said Liu Chuanzhi, Chairman of Legend Holdings and a founder of Lenovo.

Legend Holdings has committed RMB5 billion of investment in SPG and aims to grow the company's sales to RMB15 billion in five years.

RMB1=US$0.1313 (Jun 28)