China SXT Pharmaceuticals, Inc. (NASDAQ: SXTC) (“China SXT” or the “Company”) announced today that it has entered into a non-binding letter of intent with Jiangsu Renji Pharmaceutical Chain Co., Ltd. (“Renji Chain”).
Pursuant to the terms of the LOI, the Company will acquire 70% of the equity interest of Renji Chain in exchange for cash and the Company’s common shares. The parties will negotiate and agree on the final amount upon completion of Renji Chain’s audit. As the transaction proceeds, the Company will publicly disclose required information either through press releases or SEC filings, as appropriate.
Mr. Feng Zhou, Chief Executive Officer and Director of China SXT, commented, “Renji Chain is a pharmaceutical retail chain with national online drug sales license and also the biggest retail chain integrating pharmaceutical marketing and service in Taizhou. Its market share has ranked first in the pharmaceutical retail industry in Taizhou for five consecutive years.
Mr. Wei Zhang, Director and Chief Executive Officer of RenJi Chian, commented, “China SXT is a specialty pharmaceutical company focusing on the research, development, manufacturing, marketing, and sales of Traditional Chinese Medicine Pieces (“TCMPs”). It has rich experience in TCMPs operation. If the acquisition is completed, we will be able to integrate the traditional brand of Suxuantang with the new retail mode of Renji Chain. We will complement each other in strategic investment, research and development, brand promotion and marketing, as well as leveraging the advantages of both sides, to fuel the sales growth.”
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The offline stores of Renji Chain are managed according to the GSP standard. The technical team includes 120 licensed pharmacists and physicians. Since 2015, Renji Chain has established its online flagship stores in Alibaba Tmall, Jingdong health and other online platforms.Renji Chain currently has about 220,000 online registered members, with its online business covers most parts of China and is divided into the 3 different models:
- B2B Model with its flagship stores in Tmall and Pinduoduo, in which there are a steady growth of active customers;
- O2O Model with 25 online stores in Meituan and Eleme, covering most parts of Taizhou City for meeting the medical needs its residences;
- Self-operated app stores with SKU covering a wide range of products, including medical drugs, health care products, food, equipment, cosmetics, daily necessities, sports protective equipment and other commodities.
Upon completion of the acquisition, we believe our combined platform will provide sustained growth for both online and offline sales.
Completion of the transaction is subject to due diligence investigations by the relevant parties, the negotiation and execution of a definitive equity transfer agreement, satisfaction of the conditions negotiated therein including the approval of the Company’s Board of Directors, approval by Renji Chain shareholders, completion of audit of Renji Chain by PCAOB certified auditors, and the satisfaction of other customary closing conditions. There can be no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated. Further, readers are cautioned that those portions of the LOI that describe the proposed transaction, including the consideration to be issued therein, are non-binding.
Source: Biospace