the terms of the SPA are fair and reasonable, are on normal commercial terms and are in the

interests of the Company and the Shareholders as a whole.

$625.4m deal to see new key shareholder in Biosensors



The deal, announced yesterday, will see Hong Kong-listed Weigao emerge as a key shareholder of Biosensors, with a potential stake of up to 16.2 per cent. It will also gain two seats on the Biosensors board.

The proposed acquisition, which will result in JWMS becoming a fully-owned subsidiary of Biosensors, is in line with the group's strategy of expanding and consolidating its drug-eluting stent business in China.

In a regulatory filing with the Singapore Exchange (SGX) yesterday, Biosensors said the deal represents a 'unique opportunity for the company to increase its foothold and presence in the PRC (People's Republic of China), one of the fastest growing drug-eluting stent markets in the world'.

The China healthcare system is undergoing fundamental changes as a result of the government's new healthcare reform initiative, and concurrent significant expansion of financial support for its healthcare system.

'Under the new healthcare reform initiative, stent treatment is reimbursable under the PRC's basic medical insurance coverage which covers more than 90 per cent of the PRC population. This will result in lower costs and increase the demand for stent treatments.

'An ageing population and changing dietary habits have significantly increased the prevalence of coronary diseases in the PRC. According to the PRC's Ministry of Health, cardiovascular disease is the second deadliest disease in the PRC and accounted for approximately 20.8 per cent of all deaths in the PRC's urban areas in 2009,' Biosensors said.

Biosensors said the entry of Weigao - a well-established medical device company in China - as a substantial shareholder will diversify and enhance Biosensors' shareholder profile and assist the company's business expansion in the China market.

Weigao chairman Chen Xue Li said: 'Being a key shareholder of Biosensors, we are committed to make Biosensors the premier medical technology company in China and the global market.'

The purchase consideration will comprise a cash payment of S$160 million the issuance to Weigao of 260 million new ordinary shares of Biosensors at S$1.2215 per new share, amounting to S$317.59 million in aggregate and the issuance to Weigao of US$120.043 million principal amount of 4 per cent convertible notes due 2014 in the company with a conversion price of US$1.0913 for each conversion share subject to adjustment.

The total assets, net assets value, and the net tangible assets value of JWMS based on the unaudited financial statements of JWMS for the financial year ended March 31, 2011, are about US$141.6 million, US$127.1 million and US$123.8 million respectively.

The S$1.2215 pricing for each new share to be issued to Weigao represents the weighted average price for trades done on SGX on June 10.

Assuming the acquisition had been completed on April 1, 2010, Biosensors' earnings per share (EPS) for the year ended March 31, 2011, would have increased from 3.99 US cents to 29.13 US cents after the completion of the acquisition.

Upon full conversion of the convertible notes into shares at the US$1.0913 conversion price, the EPS would be 27.40 US cents. These calculations are inclusive of an estimated US$348.8 million one-off gain on re-measurement of the company's existing interest in JWMS to the fair value as at the date of the proposed acquisition as required under IFRS3.

The profit before income tax, minority interests and extraordinary items that is attributable to the proposed acquisition is US$23.3 million, which would be 47.5 per cent of the group's net profit of US$49.1 million for FY2011.

Biosensors chairman Yoh-Chie Lu said: 'Since commercialisation of its drug-eluting stents in early 2006, JWMS has become one of the top suppliers of the local DES market in China. This acquisition demonstrates a joint dedication between Biosensors and Weigao to foster stronger relationships as long-term strategic partners. The market for DES continues to grow rapidly in China and obtaining full ownership of JWMS, Biosensors will instantaneously become a stronger player in this vital market.

'At the same time, with Weigao as a strategic shareholder of Biosensors and our unique proprietary drug and polymer technologies, we are set to become a major DES supplier in China for many years to come.'

Biosensors has appointed DBS Bank as its financial adviser for the transaction.

 

(SINGAPORE) Biosensors International Group is proposing to acquire the remaining 50 per cent stake in drug-eluting stent maker JW Medical Systems Ltd (JWMS) for S$625.4 million from Shandong Weigao Group Medical Polymer Co Ltd.