Saituo Biologics Targeted at Yingu Pharmaceutical

Saituo Biology (300583) continues to expand the field of high-end APIs and preparations. On October 16, Seto Biology disclosed that the company planned to purchase 60% shares of Yingu Pharmaceutical Co., Ltd. (hereinafter referred to as "Yingu Pharmaceutical") at a price of 458 million yuan. Judging from the valuation of Yingu Pharmaceutical, its assets should not be underestimated. According to the company's official website, the marketing team alone has about 500 people. In addition, the reporter of Beijing Business Daily noticed that the relationship between Argyle Pharmaceuticals and A-share company Jiashitang was very strong, and the target was originally named Beijing Jiashitang Bio Pharmaceutical Co., Ltd. (hereinafter referred to as "Jiashitang Bio").

The overall valuation is 763.5 million yuan

Saito Biology said that the overall valuation of all parties for 100% equity of Yingu Pharmaceutical was 763.5 million yuan, and the transaction price of 60% equity of the target company was 458 million yuan. After the completion of the transaction, the company will become the controlling shareholder of Yingu Pharmaceutical.

According to the data, Yingu Pharmaceutical was founded in 2007 with a registered capital of 82 million yuan. As of the disclosure date of the announcement, Yingu Holding Group Co., Ltd. (hereinafter referred to as "Yingu Holding") is the controlling shareholder of the company, with a shareholding ratio of 56.98%; The second largest shareholder is Wang Wenjun, a natural person, with a shareholding ratio of 13.22%.

To further penetrate the equity relationship, Wang Wenjun and Li Yong held 88.62% and 11.38% of the shares of Argyle Holdings respectively. Wang Wenjun is the actual controller of Argyle Holdings and also the actual controller of Argyle Pharmaceutical.

For other information such as the performance of Yingu Pharmaceutical, Seto Biology did not disclose too much in the announcement.

According to the official website of Yingu Pharmaceutical, the company is an innovative pharmaceutical company integrating innovative drug research, API synthesis, preparation production and product sales, with 200 international R&D teams, 53000 square meters of production bases and 2500 hospitals.

Saituo Biology is the first domestic manufacturer to produce steroid drug raw materials in a large-scale way by synthetic biology, and has developed into a leading supplier of steroid drug raw materials. For the acquisition of Argyle Pharmaceuticals, Seto Biotech mainly focused on the target's R&D capability, sales team and preparation capacity.

Saito Biology said that the R&D capability of Argyle Pharmaceutical will help the company accelerate the R&D progress of pharmaceutical products and continue to expand its product line; The target covers the sales team and sales channels nationwide, which is conducive to the promotion and sales of the company's preparation products; Mature production capacity of preparations can provide a production platform with pilot scale and commercial scale for the company's products under research.

According to the official website of Yingu Pharmaceutical, the company has an international R&D team of 200 people, a marketing team of about 500 people, a production base of 53000 square meters, and 2500 hospitals.

Bu Naxin, Vice President of the Science and Technology Industry Investment Branch of China Association for the Promotion of International Science and Technology and Executive Director of the Strategic Investment Think Tank, said that from the business perspective, if the acquisition is completed, the listed company and the target can achieve complementary advantages and industrial synergy. However, the ultimate success of integration depends on the subsequent development.

The subject has a strong relationship with the Jiashitang

Looking back, the subject of Argyle Pharmaceutical has a strong relationship with the A-share company Castell.

It is understood that the former name of Argyle Pharmaceutical was Beijing Argyle Century Pharmaceutical Co., Ltd. (hereinafter referred to as "Argyle Century"), and the predecessor of Argyle Century was Castell Biology, which was also reflected in the prospectus disclosed by Castell in 2010.

According to the then prospectus of the company, the company, together with 28 natural persons such as Shanghai Haocheng Venture Capital Co., Ltd. and Wang Chunjing, jointly funded the establishment of the company in 2007, with a registered capital of 50 million yuan. The company contributed 40 million yuan in currency, accounting for 80% of the total share capital.

After that, Castell Biotech made two capital increases. The capital increase was made by the Argyle Investment, a subsidiary of Argyle Real Estate. After the capital increase, the shareholding ratio of Castell Biotech dropped to 40% and it no longer controls the company. In 2009, the company transferred 40% of its shares in the company, which was delisted by Argyle Real Estate and withdrawn from the company.

It is worth mentioning that the above mentioned Yingu Real Estate, which was once called Yingu Real Estate, is currently held by the controlling shareholder of Yingu Pharmaceutical.

The relationship between the "Silver Valley" company and the Carleton is more than that. Silver Valley Real Estate was once the major shareholder of the Carleton. According to the then prospectus of Carleton, as of the signing date of the prospectus, Argyle Real Estate held 9.4307 million shares of the company, accounting for 7.86% of the total share capital of the company before the issuance, and was the fourth largest shareholder of the company.

In addition, Wang Wenjun, the actual controller of Yingu Pharmaceutical, also served as a director of the Jiashitang.

There is doubt about the source of funds

For the acquisition consideration of 458 million yuan, Saituo Biology said that it would pay in cash.

According to the data, by the end of the first half of 2023, the monetary capital on the account of Seto Biology was 411 million yuan, while by the end of 2022, the monetary capital on the account of the company was 188 million yuan. The increase in monetary capital was mainly due to the availability of funds raised by fixed increase in the reporting period.

It is understood that in 2022, Seto Biology will issue 11.6418 million shares to specific targets in a simple procedure, raising a total of 262 million yuan. After deducting the relevant issuance expenses of 9.668 million yuan, the net amount of funds raised will be 252 million yuan, which will be invested in high-end pharmaceutical industrialization projects.

In addition, as of the end of the first half of 2023, there are no tradable financial assets in Saito Biology. According to the arrangement, the purchase price is paid by SITO BIOLOGY in cash. SITO BIOLOGY agrees to pay 5 million yuan as the deposit for this equity transfer transaction within 5 working days after the intention agreement comes into effect. After the intermediary agency issues the audit and evaluation report and the formal equity transfer agreement signed by the parties is approved by the competent authority of SITO BIOLOGY, The related parties of this equity transfer shall handle the payment of equity transfer funds and the transfer registration of the underlying assets within 20 working days.

Liu Shengyu, the managing partner of Gaohe Investment, told the Beijing Business Daily that it is common for enterprises to borrow money from banks and other external institutions in case of insufficient M&A funds. However, if the amount of borrowing is very high, we should also be alert to the repayment risk.

With regard to the company's acquisition funds and other issues, a reporter from Beijing Business Daily sent an interview letter to the Office of the Secretary of the Board of Directors of Seto Biology, but as of press release, the other party had not replied.

According to the data, Saituo Biology landed in the A-share market in January 2017, and its net profit in 2020 was the first loss after listing. After that, its net profit in 2021 and 2022 was in a year-on-year growth state.

In the first half of this year, Saituo Biology realized an operating income of about 664 million yuan, up 4.31% year on year; The corresponding attributable net profit was about 59.97 million yuan, up 85.43% year on year; The corresponding net profit after deducting non profits was about 37.13 million yuan, up 20.73% year on year.

On the secondary market, Saito Biology closed down 3.27% on October 16, at 19.79 yuan/share, with a total market value of 3.754 billion yuan.

key word: Jiashitang pharmacy company 10000 yuan