SP Pharma to branch into electric wire industry
Shanghai. September 27. INTERFAX-CHINA - Shanghai Stock Exchange-listed SP Pharmaceutical Co. Ltd. plans to diversify into the electric wire and cable industry, the company announced today.
According to the announcement, SP Pharma has received approval from the China Securities Regulatory Commission (CSRC) to issue 307 million shares to its parent company, Far East Holding Group Co. Ltd.
Following the issuance, Far East Holding will transfer sole ownership of Far East Electric Wire Co. Ltd., New Far East Electric Wire Co. Ltd. and Far East Fuhe Technology Co. Ltd. to its subsidiary. No cash is involved in the deal.
Far East Electric, New Far East Electric and Far East Fuhe generated combined sales revenue of over RMB 10 billion ($1.49 billion) in 2008.
The deal will increase Far East Holding's stake in SP Pharma from 27.96 percent to 79.77 percent.
According to the announcement, SP Pharma hopes the deal will reduce its exposure to intense competition in China's pharmaceutical industry which has squeezed profit margins in the sector.
Headquartered in Jiangsu Province, Far East Holding is China's leading electric wire and cable manufacturer.
SP Pharma is a traditional Chinese medicine (TCM) manufacturer, and generated sales revenue of RMB 212.07 million ($31.70 million) in 2009, up 2.07 percent from the previous year.