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Executive chairman makes offer for Star Pharmaceutical

The executive chairman of Mainboard-listed Star Pharmaceutical, Xu Zhi Bin,  has purchased from executive director Wang Qi a 22.67 per cent stake in the pharmaceutical company for about S$1.5 million or S$0.142 per share, triggering an offer for the company at  S$0.45 in cash.

The offeror, comprising Mr Xu and a special purpose vehicle which he is sole director of, does not intend to revise the offer price, except in a competitive situation. It also plans to delist the company.

Mr Xu has given an irrevocable undertaking to accept the offer with his 30.52 per cent shareholding, and has also waived his rights to receive any cash settlement from the offeror as consideration for his shares.

With this, the offeror and parties acting in concert will hold more than 50 per cent of the voting rights attributable to the shares, rendering the offer unconditional.

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Star Pharmaceutical manufactures and sells both western and TCM-formulated prescription drugs. 

In its offer announcement, the offeror said that delisting and privatising the company will provide it and the company with more control and management flexibility in implementing its strategic initiatives and operational changes. It will also do away with the resources and costs of maintaining the company’s listing status.

It added that it does not plan to introduce any major changes to the existing business, or re-deploy the fixed assets of the group, or discontinue the employment of the staff, other than in the ordinary course of business.

It said that this is an opportunity for shareholders to realise their investment in cash at a premium, given that the offer price is higher than the highest price at which the shares have traded over the last five years.

The offer price represents a premium of about 180 per cent, 176 per cent, 187 per cent and 192 per cent over the volume-weighted average price per share for the one-month, three-month, six-month and 12-month periods, respectively.

CEL Impetus Corporate Finance is financial adviser to the offeror.

Shares of Star Pharmaceutical closed at S$0.175 on July 26 on thin trading volume.