Center Laboratories Inc (晟德) yesterday said it and a subsidiary are considering spending NT$3.1 billion (US$101.34 million) to acquire a 25.84 percent stake in China-based pediatric milk formula maker Ausnutria Dairy Corp (澳優乳業).
The planned acquisition is expected to enhance the cash flow in Center Laboratories, a pharmaceutical investor.
Center Laboratories said it alone would spend NT$1.6 billion on the deal, while its subsidiary would spend NT$1.5 billion.
The two companies would become the second-largest shareholder in Ausnutria Dairy, it said.
Ausnutria Dairy is expected to report a profit of about 122 million yuan (US$19.9 million) this year, according to a Center Laboratories official who declined to be named.
CASH FLOW
The Chinese dairy company could generate a cash flow of between 120 million and 150 million yuan a year in the future, the official said.
“There are some companies Center Laboratories has invested in that seem to have uncertain futures, such as China-based cancer drugmaker TOT Biopharm Co (東曜), which depends highly on the Chinese government’s policy on the approval of its products,” company chairman Lin Rong-jin (林榮錦) said in an investors’ conference yesterday. “We have to find a way to secure more cash flow.”
‘LOW-RISK’
Compared with many pharmaceutical development companies that Center Laboratories has invested in, Ausnutria Dairy might not provide significant capital gains, but the investment reflects a lower risk, Lin said.
Lin said Ausnutria Dairy posted revenue of 937 million yuan in the first half of this year, adding that the company is expected to generate increased sales in the second half, given that it won Chinese government approval to import products into China in May.
TRANSITIONAL CHIEF
Lin is to serve as chief executive of Ausnutria Dairy starting today, he said, adding that he intends to dedicate his first three months in the position to reforming the company.
Lin said he would remain chief executive until Ausnutria Dairy completes its acquisition of Netherlands-based Hyproca Dairy Group BV — expected in August next year — and after Ausnutria Dairy completes its capacity expansion in the Netherlands.
Lin said he expects to find a new candidate for the position within a year.
BROADENED MIX
Ausnutria Dairy currently has 51 percent of Hyproca Dairy shares, a goat milk powder producer, Lin said, adding that Hyproca Dairy is expected to generate a profit of 6.5 million euros (US$8.07 million) this year.
Lin said he plans to increase Ausnutria Dairy’s product mix by selling manufactured foods for people who have diabetes and cancer.
As for Center Laboratories, Lin said three subsidiaries of the company are expected to become listed in Taiwan within the next three years, which would provide growth momentum for the parent firm.
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