Matrix takes control of Chinese firm Mchem

Signs share purchase pact with promoters to pick up 60% stake.

Matrix Laboratories has entered into a share purchase agreement to acquire a controlling stake of about 60 per cent in Mchem group of China.

The transaction is expected to be completed before end of December 2005 and is subject to meeting certain conditions and regulatory approvals.

The share purchase agreement is in line with the strategic intent and the memorandum of understanding that the company had signed earlier with Mchem to gain access to the comparative advantage that China provides in sourcing of pharmaceutical chemicals and intermediates and to establish a cost-effective supply chain.

The acquisition of substantial stake in Mchem group will help the company backward integrate into China for manufacture of intermediates and consolidate its position as a major supplier of active pharmaceutical ingredients (APIs), particularly anti-retrovirals (ARVs) worldwide, a press release said.

Based in Xiamen, on the east coast of China, Mchem group manufactures pharmaceutical products ranging from basic chemicals, intermediates, active pharmaceutical ingredients to finished dosage forms with a group turnover of about $35 million.

Mchem group recently signed an agreement with the President Clinton Foundation, making it the only Chinese company supplying intermediates, APIs to the foundation's partners besides supplying finished dosage forms to the Chinese government-sponsored HIV programme.

"The acquisition of substantial stake in Mchem group is a strategic step towards strengthening our supply chain and to establish as a cost-effective manufacturer. With absolutely no overlap of products, customers and markets, Matrix would further strengthen its presence in the global markets," N Prasad, executive chairman of Matrix Laboratories, said. The scrip hit a high of Rs 190 and a low to Rs Rs. 185.4, before closing at Rs 188 on the Bombay Stock Exchange.