In January, the Company announced that it signed an Assets Transfer Contract to acquire Hongrui, including all of Hongrui's manufacturing and office buildings, land, equipment and inventories. This acquisition also includes all the rights to manufacture and distribute Hongrui's 22 Traditional Chinese Medicines. The total purchase price will be RMB110 million (approximately $16.1 million) consisting of RMB66 million in cash (approximately $9.6 million) and 643,651 shares of Genesis' common stock. The Company has valued the equity consideration to be paid in this transaction at approximately $12.2 million based on the closing price of the Company's common stock on January 23, 2009.
The acquisition of Hongrui will increase the Company's product portfolio from 6 to 28 products, and will increase the Company's presence in the over the counter drug market while helping balance Genesis' over the counter sales with its sales of prescription drugs. Genesis will manufacture, label and distribute the drugs it purchased from Hongrui under its own brand name, "Jiangbo."
"We are excited by the opportunity to expand our over the counter presence by selling Hongrui's drugs. We expect that sales of Hongrui products will have an immediate positive impact on our revenue growth. Because our attention is no longer being diverted by the demands of arbitration procedures, we believe that we can return our attention to growing Genesis and developing our Hongrui purchase."
The Company participated in a number of American Arbitration Association
("AAA") proceedings during the latter part of 2008 and the beginning of 2009.
|SOURCE Genesis Pharmaceuticals Enterprises, Inc.|
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