Bloks Group Limited — M&A Activity 2000

Oct 30, 2000

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED

香 港 葯 業 集 團 有 限 公 司*

(Incorporated in Bermuda with limited liability)

POSSIBLE MAJOR TRANSACTION

On 27 October 2000, China Genetic, a wholly-owned subsidiary of Hong Kong Pharmaceutical, entered into the Letter of Intent with De Chang pursuant to which De Chang has agreed to sell, and China Genetic has agreed to purchase, the 57 per cent. shareholding interest owned by De Chang in Hua Xin at a consideration of US$5,483,400 (subject to adjustments). The Proposed Purchase is subject to China Genetic being satisfied with the due diligence results to be conducted by China Genetic on Hua Xin.

As the Proposed Purchase is subject to the fulfillment of certain conditions and may or may not proceed, shareholders and investors are advised to exercise caution when dealing in the shares of Hong Kong Pharmaceutical.

On 27 October 2000, China Genetic, a wholly-owned subsidiary of Hong Kong Pharmaceutical, entered into the Letter of Intent with De Chang pursuant to which De Chang has agreed to sell, and China Genetic has agreed to purchase, the 57 per cent. shareholding interest owned by De Chang in Hua Xin at a consideration of US$5,483,400 (subject to adjustments to be agreed after the completion of the due diligence exercise to be conducted by China Genetic on Hua Xin). A refundable deposit of US$1,100,000 will be paid by China Genetic to De Chang out of the internal resources of Hong Kong Pharmaceutical within one week after the signing of the Letter of Intent.

The principal activities of Hua Xin are the research, development, manufacture and sale of its bio-technological pharmaceutical products. The directors of Hong Kong Pharmaceutical believe that the Proposed Purchase, if implemented, will enhance the capability of the group in the research, development, manufacture, promotion and sale of its pharmaceutical products.

Upon the signing of the Letter of Intent, China Genetic, will conduct an in-depth due diligence exercise on Hua Xin. Subject to China Genetic being satisfied with the due diligence results, China Genetic and De Chang will enter into a formal sale and purchase agreement in connection with the Proposed Purchase within 90 days after the signing of the Letter of Intent. If China Genetic is not satisfied with the due diligence results, China Genetic is entitled to forthwith terminate the Letter of Intent and De Chang shall return the US$1,100,000 deposit, together with interests, to China Genetic within one week after De Chang is notified of the termination.

Both De Chang and Hua Xin are independent of and not connected with Hong Kong Pharmaceutical, its directors, chief executive, substantial shareholders, subsidiaries, or any associates of any of them.

The Proposed Purchase, if it proceeds, will constitute a major transaction for Hong Kong Pharmaceutical under the Listing Rules and will be subject to shareholders’ approval. A further announcement will be made upon the signing of the formal sale and purchase agreement, or when China Genetic decides not to proceed with the Proposed Purchase, as the case may be.

As the Proposed Purchase is subject to the fulfillment of certain conditions and may or may not proceed, shareholders of Hong Kong Pharmaceutical and investors are advised to exercise caution when dealing in its shares.

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

“China Genetic”	means China Genetic Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly owned subsidiary of Hong Kong Pharmaceutical;
“De Chang”	means Shanghai De Chang Investment Development Company Limited上海德昌投資發展有限公司, a limited liability company registered in Shanghai, the PRC;
“Hong Kong Pharmaceutical”	means Hong Kong Pharmaceutical Holdings Limited, a company incorporated in Bermuda whose securities are listed on The Stock Exchange of Hong Kong Limited;
“Hua Xin”	means Shanghai Hua Xin High Biotechnology Inc. 上海華新生物高技術有限公司, a sino-foreign joint venture registered and established in Shanghai, the PRC;
“Letter of Intent”	means the letter of intent entered into by China Genetic and De Chang on 27 October 2000;
“Listing Rules”	means The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
“PRC”	means the People’s Republic of China;
“Proposed Purchase”	means the proposed purchase by China Genetic of a 57 per cent. shareholding interest in Hua Xin pursuant to the Letter of Intent.

By Order of the Board of Directors

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED

Huang Shuyun

Deputy Chairman and Managing Director

Hong Kong, 27 October 2000

* For identification only