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China's Wuxi agrees to buy AppTec

Wuxi PharmaTech Inc (藥明康德), China's largest drug-research contractor, agreed to buy closely held AppTec Laboratory Services Inc for about US$151 million.

AppTec, of St. Paul, Minnesota, is expected to have US$70 million to US$72 million in 2007 revenue with a compound annual growth rate of 46 percent, the companies said late Thursday in a statement. It has US$11.7 million in debt. Like Wuxi, AppTec provides lab testing of biopharmaceuticals and devices.

The deal gives Shanghai-based Wuxi, which does research for nine of the 10 largest drugmakers, access to AppTec's expertise in making biotechnology-based drugs, Wuxi said. This is the biggest Chinese takeover of a US company since Lenovo Group Ltd (聯想) bought International Business Machines Corp's PC business for US$1.75 billion in December 2004.

WHAT WUXI NEEDS

AppTec has "a very complimentary service which Wuxi needs," said Jinsong Du (杜進松), a Hong Kong-based analyst at Credit Suisse Group, before the deal was confirmed. Du has an "outperform" rating on Wuxi.

"It helps them build up their customer base and may potentially bring more service offerings," the analyst said.

Wuxi's stock has doubled from its initial public offering price in August, giving it a market value of US$1.77 billion. The stock surged US$1.46, or 5.1 percent, to US$30.30 on Thursday in New York Stock Exchange composite trading.

John Dooley, an outside spokesman representing Wuxi, said he couldn't immediately comment on the price. AppTec spokeswoman Julie Cooperman didn't return calls for comment.

Wuxi has 70 customers including New York-based Pfizer Inc, the world's biggest drugmaker.

The company had a net income of US$7.1 million in the quarter ended last June, compared with US$8.9 million for all of 2006, according to its share sale prospectus.

PROMOTED

Separately, Wuxi promoted Edward Hu (胡正國) to chief operating officer, the company said. Hu, hired in August as executive vice president of operations, was formerly chief operating officer at Tanox Inc, a Houston-based biotechnology company acquired in August by Genentech Inc, based in San Francisco, California.
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