Chinese pharmaceutical maker Taiji Group is accelerating consolidating its three listed units.
The three units are Chongqing Taiji Industry (Group) Co., Ltd.(SHSE: 666129), Southwest Pharmaceutical Co., Ltd. (SHSE: 600666) and Chongqing Tong Jun Ge Co., Ltd. (SZSE: 000591). Both Taiji Industry and Southwest Pharmaceutical said on May 14 that Taiji Industry would consolidate Tong Jun Ge and Southwest Pharmaceutical as planed. Driven by this, Taiji Industry enjoyed a limit-up rise on the day and Southwest Pharmaceutical surged up by 6.08 percent. Tong Jun Ge still suspended trading on the Shenzhen bourse.
Taiji Industry saw its 2012 shareholders meeting be held on May 10 this year and at the meeting, an investor asked top executives of it whether Taiji Group would lose its control over the three listed firms. The investor stressed that share price of Taiji Industry was relatively low and there would be great possibility for Taiji Group to lose the control over the three listed units provided that a malicious acquisition was launched. Taiji Industry closed at CNY 6.76 on May 9. Its total capital stock was 427 million shares and that was to say market cap of it was only about CNY 2.89 billion. And if an investor acquired a 50 percent stake in it at such a price, it would lose the control over the three listed firms by then. A top executive of it answered that there would be little possibility for Taiji Group to lose the control over the three units as the gap between its top two shareholders was quite wide.
People in the know disclosed in an interview recently that a Japanese firm once wanted to acquire the three listed units of Taiji Group through a wholly-owned subsidiary in Shanghai and in order to make the deal, it even alleged that after the deal, it would invest up to CNY 10 billion in Chongqing. However, the plan was turned down by Taiji Group and a major reason was that the relationship between China and Japan became tense due to the Diaoyu Island issue.
The insider reiterated that the consolidation among Taiji Industry, Southwest Pharmaceutical and Tong Jun Ge advanced slowly and there would be little possibility for Taiji Group to sell all of them. There would be great possibility for it to sell two of them and the progress of selling Tong Jun Ge would be faster than that of Southwest Pharmaceutical. And after the sales, it would acquire assets of the two through the mode of asset repurchase.
