WuXi sells small share of CMO subsidiary for $28m
The sale values the subsidiary at about $509m and comes as WuXi received approval from the National Equities Exchange and Quotations in China to list STA’s shares on the New Third Board, the over-the-counter stock exchange in China.
STA shares were listed beginning last Friday, though WuXi said it does not currently plan to issue new STA stock to the public immediately.
STA provides process chemistry services and manufactures small-molecule advanced intermediates and APIs for customer use in preclinical and clinical trials and for marketed small-molecule drugs. Its operations are located in Shanghai, and in Changzhou, China. But STA does not include WuXi's biologics manufacturing business, which has driven growth over the past few years.
The sale of the stake in STA followed receipt of required government approvals, and it came at a price based on a third-party appraisal. WuXi will recognize a related gain on the sale in Q2. Two-thirds of the shares purchased by the management are subject to a lock-up, with 1/3 available for sale on the first anniversary of the listing date and another 1/3 available for sale on the second anniversary of the listing date.
WuXi noted that STA's business is significantly more capital intensive than WuXi's laboratory services business and is in the process of building new facilities in Changzhou to increase its production capacity. The first phase will be completed and operational by the end of 2015 and will double manufacturing capacity for the WuXi subsidiary.
STA filed its application to list on the New Third Board late last year to allow for the flexibility to raise capital to fund its future growth and to pursue potential M&A (mergers and acquisitions).
