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Appointed as Hong Kong legal advisers to a possible unconditional mandatory cash offer


Chungs Lawyers, the associated firm of DeHeng Law Offices in Hong Kong, has been appointed as the Hong Kong legal advisers to Charmacy Pharmaceutical Co., Ltd. (stock code: 2289) (“Charmacy”) in relation to the possible unconditional mandatory cash offer by Guotai Junan Securities (Hong Kong) Limited for and on behalf of Jiangxi Jiangzhong Pharmaceutical Commercial Operation Co., Ltd. (the “Offeror”).


Pursuant to a share transfer agreement between Mr. Yao Chuanglong (“Mr. Yao”) (the controlling shareholder of Charmacy) (as the transferor) and the Offeror (as the transferee) dated 13 September 2022, Mr. Yao has conditionally agreed to sell and the Offeror has conditionally agreed to purchase an aggregate of 9,720,000 shares of Charmacy, representing 9.00% of the entire issued share capital of Charmacy. Subject to completion of the share transfer, Guotai Junan Securities (Hong Kong) Limited will make an unconditional mandatory cash offer for all the issued shares of Charmacy for an on behalf of the Offeror in compliance with the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”) at the offer price of HK$7.29 per offer share of Charmacy. The offer period commenced on 28 September 2022 (the “Offer Period”).


Furthermore, Chungs Lawyers advised Charmacy on the land resumption with Foshan Chancheng District Land Reserve Center and Foshan Chancheng District Zumiao Sub-district Office involving a consideration by way of cash compensation of RMB160,000,000 which is prohibited without the approval of its shareholders during the Offer Period under rule 4 of the Takeovers Code. Chungs Lawyers advised Charmacy on its application for a waiver from the requirement under rule 4 of the Takeovers Code and such waiver has been granted by the Securities and Futures Commission. On 11 October 2022, Charmacy entered into the land resumption agreement with the relevant government authorities.


Charmacy is a company listed on the Main Board of the Stock Exchange. Charmacy is principally engaged in pharmaceutical distribution business. The Offeror is a Jiangxi provincial state-owned enterprise principally engaged in the wholesale and retail of medicines and the sales of food, disinfection equipment and Class III medical devices. The Offeror is owned as to (i) 20.50% by Jiangxi State-Owned Capital Operation Holdings Group Co. Ltd, which is ultimately controlled by State-owned Assets Supervision and Administration Commission of Jiangxi Province; and (ii) 20.50% by China Resources Jiangzhong Pharmaceutical Group Co., Ltd., which is ultimately controlled by China Resources Pharmaceutical Group Limited, whose shares are listed on the main board of the Stock Exchange (Stock Code: 3320.hk).


The Partners of Chungs Lawyers, the associated firm of DeHeng Law Offices in Hong Kong, Ernest Chung and Boaz Cheung, led the team including Crystal Wong, Chloe Yuen, Elvis Lee, Syndi Ling and Dicky Lau.

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