Forbes Medi-Tech Receives Proposal from Pharmachem Laboratories, Inc.

21 Jul 2010 --- Subject to the terms and conditions of the Asset Purchase Agreement, the Company intends to pursue discussions with Pharmachem to determine if the Proposal can become a firm offer that is financially superior to the transaction with MHT.

Jul 21 2010 --- Forbes Medi-Tech Inc. announced that Pharmachem Laboratories, Inc., a U.S.-based manufacturer and supplier of ingredients, including nutritionals, food and beverages, flavors and fragrances, has advised the Company that, subject to a satisfactory due diligence review in its sole discretion, it would be prepared to make an offer, that would not be subject to a financing condition, to acquire substantially all of the assets of the Company for cash consideration that exceeds the purchase price described in the asset purchase agreement between the MHT, LLC (MHT) and the Company (the "Asset Purchase Agreement") announced in our news release of July 13, 2010. The Pharmachem proposal (the Proposal") constitutes an Acquisition Proposal pursuant to the terms of the Asset Purchase Agreement.

The Company's Board of Directors, after consultation with its outside legal counsel, has concluded that the Proposal would reasonably be expected to lead to a Superior Offer, as that term is defined in the Asset Purchase Agreement. The Company has entered into a confidentiality and standstill agreement with Pharmachem. Subject to the terms and conditions of the Asset Purchase Agreement, the Company intends to pursue discussions with Pharmachem to determine if the Proposal can become a firm offer that is financially superior to the transaction with MHT and that the Company can otherwise treat as a Superior Offer under the Asset Purchase Agreement.

There can be no assurance that Pharmachem will in fact make a firm offer or, if it does, as to the price, terms or conditions thereof. In the event that Pharmachem does make a firm offer that the Board determines constitutes a Superior Offer which the Company wishes to accept, MHT would have the right, but not the obligation, to match such offer within a 5 business day period.

The Board confirms that it continues to support the MHT transaction and confirms its unanimous conclusion that the transaction with MHT is in the best interests of the Company and is fair to the Company's shareholders and its recommendation that shareholders vote in favour of the MHT transaction. The Asset Purchase Agreement with MHT remains in effect as of the date of this News Release.
 

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