(Yicai) July 18 -- Shares of China Resources Boya Bio-Pharmaceutical Group dropped after the Chinese company said it would spend CNY1.8 billion (USD251 million) to purchase Green Cross Hong Kong Holdings, a loss-making manufacturer of blood products with links to South Korea, with an almost threefold premium.

CR Boya [SHE: 300294] closed 4.9 percent lower at CNY33.94 (USD4.70) in Shenzhen today after diving as much as 9.1 percent intraday. Its largest shareholder, China Resources Pharmaceutical Group [HKG: 3320], climbed 1.9 percent to close at HKD5.43 (70 US cents). CR Pharma has 29.3 percent of CR Boya's equity.

Through the purchase, CR Boya will indirectly own Green Cross China Biological Products, a unit of GC HK that runs blood donation and blood products manufacturing facilities in the mainland, the Fuzhou-based buyer announced yesterday. 

The sellers are Green Cross Biopharma, the third-largest biopharmaceutical company in South Korea, South Korea's Synaptic Healthcare 1st Private Equity Fund, as well as 46 natural persons with South Korean nationality.

The acquisition price is about 8.5 percent higher than the value of shareholders' equity as of Sept. 30, last year, and it is almost three times as much as the book value of CNY645 million (USD88.9 million), per the same document.

The buyer explained the high premium. GC China is one of the nation's few companies that has a license to sell plasma-derived factor VIII and recombinant factor VIII, products used to treat hemophilia A, a blood clotting disorder, it said. Since 2021, the Chinese government has controlled the total number of blood product makers, which makes the entry barrier high, it added.

The deal will give CR Boya one additional license to make blood products and four more blood donation facilities, as well as a widened scope of two new provincial regions for its plasma-collecting business. 

GC China produces blood products of 16 specifications in six categories. Last year, it collected 104 tons of plasma. The compound annual growth rate reached 13 percent in the past six years. However, the firm suffered net losses in the past two years.

At present, CR Boya owns 14 plasma-collecting facilities. Last year, it garnered 467.3 tons of plasma, and the goal is to raise the number to as high as 700 tons next year, the firm said earlier.

Editors: Tang Shihua, Emmi Laine