CCM buying Duopharma

Chemical Company of Malaysia Bhd (CCM) is taking control of Duopharma Biotech Bhd via the acquisition of a 36% stake comprising 47.93 million shares in the pharmaceutical-based company at RM2.80 per share for a total of RM134.21 million cash.
CCM will buy the shares from Duopharma managing director Chia Ting Poh @ Cheah Ting Poh and executive director Ang Bee Lian, who own 20.61 million and 27.32 million shares in the company, respectively.
CCM’s unit Tekan Maju Sdn Bhd entered into a sale and purchase agreement with Chia and Ang on July 20 to acquire all their shares, CCM said in a statement on July 21.
CCM, in which Permodalan Nasional Bhd holds a 52.67% stake, said Tekan Maju would be obliged to extend a mandatory offer at RM2.80 per share for the remaining shares not held.
The purchase consideration represented a 2.19% premium over the five-day weighted average market price of RM2.74 per share.
Duopharma, which was suspended on July 21, was last traded at RM2.78.
Analysts said the RM2.80 was fair value over the short term but said the valuation should take the long-term potential of Duopharma into more consideration given the contracts that it was expected to secure in the future.
Duopharma is expected to ink a two-year contract next month with the Health Ministry for the supply of drugs for HIV/AIDS patients.
The government is also expected to decide soon on the awarding of the contract for the supply of methadone in a two-year pilot project to treat drug addicts, and Duopharma is believed to be the frontrunner for the job.
TA Securities research head Ngu Chie Kean said the move showed that PNB was no longer an inactive investor.
He said the acquisition of Duopharma would make it easier for CCM to create more value in expanding and upgrading its operations and products.
“However, the question is whether CCM will keep the listing status or merge,” he said. PNB owned 199.97 million shares in CCM as at June 21, 2005. The Employees Provident Fund (EPF) holds 11.33% or 15.08 million shares.
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