DSM Expand China Partnership
As part of the overall strategic cooperation, DSM will make a strategic investment in NCPC by obtaining a minority share in NCPC GroupCo.
27/10/05 Royal DSM N.V. and the North China Pharmaceutical Group Corporation Ltd. (NCPC GroupCo) of Shijiazhuang, Hebei Province, China have announced a further detailing agreement confirming the terms of further cooperation between NCPC and DSM via investments by DSM in NCPC GroupCo as well as in NCPC ListCo and the establishment of two joint ventures in the areas of nutritional products (especially Vitamin C and B12) and anti-infective products (especially beta lactam antibiotics).
This agreement is the follow-up to the announcements made at the end of 2004. As part of the overall strategic cooperation, DSM will make a strategic investment in NCPC by obtaining a minority share in NCPC GroupCo. Under the terms of the agreement, DSM also intends to acquire a minority stake in NCPC ListCo, an affiliate of NCPC, listed on the Shanghai stock exchange. In addition, DSM will obtain a 49% controlling interest in the two joint ventures for nutritional products and anti-infectives. These joint ventures will be based in Shijiazhuang, Hebei Province. Sales are expected to start at approximately USD 275 million / year.
The total cash investment of DSM in the deal is USD 164 million. In addition DSM will contribute to the joint ventures with technology and management capabilities. NCPC will bring into the joint ventures their existing factories producing Vitamin C & B12 and beta lactam antibiotics as well as their marketing and sales force, which is also geared towards the fast growing domestic markets in China. The combination of capabilities and competencies of DSM and NCPC will lead to the world's best possible combination of technologies and low cost manufacturing whilst securing high quality and benefiting from the global DSM sales network.
The agreement was signed by Mr. Chang Xing, Chairman of NCPC Group, and Mr. Feike Sijbesma, member of DSM's Managing Board, in the presence of Mr. Ji Yunshi and Mr. Fu Shuangjian, respectively Governor and Vice Governor of Hebei Province with the full support of Mr. Bai Keming, Party Secretary of Hebei Province.
The overall strategic cooperation is expected to bring significant benefits to both parties who now intend to work together towards obtaining the necessary approvals for the strategic partnership as soon as possible.
Mr. Peter Elverding, Chairman of DSM's Managing Board, comments: "This is a major step for DSM in the context of Vision 2010 - Building on strengths. It serves three key strategic targets: strengthening our Nutritional Products as well as our Anti-Infectives portfolio and expanding our presence in the emerging China market. The overall strategic partnership with NCPC provides an accelerated growth path into the Chinese nutrition and pharma market and it will significantly contribute to our target of doubling sales in China to USD 1 billion in 2010."
NCPC, together with its affiliates, is one of the largest vitamins and antibiotics manufacturers in the People's Republic of China, originally established in 1953 in Hebei Province. NCPC comprises 24 controlled subsidiaries, 8 associated companies, and an additional 14 indirectly controlled subsidiaries. Total 2004 group revenues of NCPC are approximately RMB 7.7 billion (EUR 770 million). The NCPC Group employs around 18,000 people.
