LAIYANG, China, April 18, 2011 /PRNewswire-Asia-FirstCall/ -- Jiangbo Pharmaceuticals, Inc. (Nasdaq: JGBO) ("Jiangbo" or the "Company"), a pharmaceutical company with its principal operations in the People's Republic of China ("China"), today announced that Laiyang Jiangbo Pharmaceutical Co., Ltd., a limited liability company organized under the laws of PRC and controlled by Jiangbo through contractual arrangements. ("Laiyang Jiangbo"), has entered into a letter of intent (the "LOI") with Shandong Xinkangqi Medical Company ("Xinkangqi"), a regional wholesale drug distributor in Shandong Province, pursuant to which Laiyang Jiangbo plans to acquire 100% of the outstanding equity of Xinkangqi.
Founded in 2003, Xinkangqi was one of the first companies in Shandong to receive the Province's Good Sales Practice license. Xinkangqi currently has approximately 180 employees and professionals and distributes pharmaceuticals, traditional Chinese medicines, antibiotics, chemical drugs, biological products, disinfection products and chemical raw materials manufactured by more than 600 pharmaceutical companies to retail pharmacies, hospitals, medical centers and health clinics throughout Shandong Province.
Xinkangqi's unaudited revenue and net income in 2010 are estimated to be approximately $180 million and $4.4 million, respectively. The transaction purchase price will be finalized upon conclusion of the due diligence process.
Laiyang Jiangbo plans to complete legal, operational and financial due diligence of Xinkangqi within a period of three months, including but not limited to, an assessment of Xinkangqi's intellectual property, business operations, assets, liabilities, organizational structure, and contracts with other parties. Pursuant to the LOI, Laiyang Jiangbo has agreed to retain Xinkangqi's current employees and management team after the transaction closes. The Company expects that the acquisition will close by the end of September 2011.
"We are very pleased to announce the entry into the LOI with Xinkangqi which we believe has a strong presence in Shandong, one of China's largest provinces with over 94 million inhabitants," commented Mr. Linxian Jin, CEO of Jiangbo. "Xinkangqi currently distributes many of our products and we anticipate achieving meaningful synergies by vertically integrating our manufacturing operations with Xinkanqi's distribution business after the transaction is closed. We plan to continue to evaluate strategic uses for our substantial remaining cash balance, including additional acquisitions in the fragmented distribution sector. Among our current operational goals, we plan to build Xinkangqi into one of the largest vertically-integrated wholesale drug distributors in Shandong."
About Jiangbo Pharmaceuticals, Inc.
Jiangbo is engaged in the research, development, production, marketing and sales of pharmaceutical products in China. The Company's operations are located in Eastern China in an Economic Development Zone in Laiyang City, Shandong Province. Jiangbo produces both western and Chinese herbal-based medical drugs in tablet, capsule, granule, syrup and electuary (sticky syrup) form. For additional information, please visit the Company's website (www.jiangbopharma.com).
Safe Harbor Statement
Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to conduct and close the transaction with Xinkangqi. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers, product obsolescence, and risks to the Company's outlook for future operations. More information about the potential factors that could affect the Company's business and financial results is included in the Company's filings, available via the United States Securities and Exchange Commission.
SOURCE Jiangbo Pharmaceuticals, Inc.