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ShangPharma Corporation Enters Into Definitive Merger Agreement For Going Private Transaction

SHANGHAI, China, Dec. 21, 2012 /PRNewswire/ -- ShangPharma Corporation (NYSE: SHP) (the "Company"), a leading China-based pharmaceutical and biotechnology research and development outsourcing company, today announced that the Company has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with ShangPharma Holdings Limited ("Holdings"), ShangPharma Parent Limited ("Parent") and ShangPharma Merger Sub Limited ("Merger Sub"), pursuant to which Parent will acquire the Company for US$0.50 per ordinary share or US$9.00 per American Depositary Share, each representing eighteen ordinary shares ("ADS"). This represents a 30.8% premium over the closing price of $6.88 per ADS as quoted by the New York Stock Exchange (the "NYSE") on July 5, 2012, the last trading day prior to the Company's announcement on July 6, 2012 that it had received a "going private" proposal, and a 44.8% and 34.2% premium to the volume-weighted average closing price of the Company's ADSs during the 30 and 60 trading days prior to August 13, 2012, respectively.  The consideration to be paid to holders of ordinary shares and ADSs implies an equity value of the Company at approximately US$173 million, on a fully diluted basis.

Pursuant to the Merger Agreement and subject to the satisfaction or waiver of its terms and conditions, Merger Sub, which is wholly owned by Parent, will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Parent (the "Merger").  In connection with and at the effective time of the Merger, all of the Company's ordinary shares issued and outstanding immediately prior to the effective time of the Merger (including ordinary shares represented by ADSs) will be canceled and converted into and exchanged for the right to receive US$0.50 per ordinary share or US$9.00 per ADS, in each case, in cash and without interest, except for the (i) ordinary shares (including ordinary shares represented by ADSs) owned by certain shareholders of the Company, including affiliates of Mr. Michael Xin Hui, the chairman of the board of directors and chief executive officer of the Company, Mr. Kevin Penghui Chen, a director of the Company, and TPG Star Charisma Limited and TPG Biotech II  Charisma Limited (collectively "TPG"), which are subject to a contribution agreement with Holdings and Parent whereby such shareholders have agreed to contribute such ordinary shares (the "Rollover Shares") to Holdings in exchange for ordinary shares of Holdings (ii) ordinary shares owned by the Company as treasury shares and ordinary shares (including ordinary shares represented by ADSs) owned by ChemExplorer Investment Holdings Limited and ChemPartner Investment Holdings Limited as are required to fully settle any and all vested but unsettled restricted share units as of the closing date of the Merger Agreement that were granted under (A) the Founder's 2008 Equity and Performance Incentive Plan, or (B) the Company's 2010 Share Incentive Plan, which will be canceled for no consideration; and (iii) ordinary shares owned by holders of such ordinary shares who have validly exercised and not lost their appraisal rights pursuant to Section 238 of the Cayman Islands Companies Law, as amended, which will be canceled and will entitle the former holders thereof to receive the appraised value thereon in accordance with such holder's appraisal rights under the Cayman Islands Companies Law.

Holdings, Parent, and Merger Sub are all newly-formed Cayman Islands exempted companies with limited liability. Immediately after the completion of the Merger, Parent will be beneficially owned by ChemExplorer Investment Holdings Limited, ChemPartner Investment Holdings Limited, Joint Benefit Group Limited, Han Ming Tech Investment Limited and TPG (collectively, the "Buyer Group"). Each of ChemExplorer Investment Holdings Ltd. and ChemPartner Investment Holdings Limited is a British Virgin Islands company beneficially owned by Mr. Michael Xin Hui and three trusts, of which Mr. Michael Xin Hui and his family members are beneficiaries. Joint Benefit Group Limited  is beneficially owned by Hui Family Trust, of which Mr. Michael Xin Hui's family members are beneficiaries.  Han Ming Tech Investment Limited is beneficially owned by Mr. Kevin Penghui Chen, a director of the Company. The Buyer Group collectively beneficially owns approximately 66% of the outstanding shares of the Company (excluding outstanding options of the Company).

Holdings, Parent and Merger Sub intend to fund the Merger consideration through a combination of a cash contribution from TPG Star Charisma Ltd., TPG Biotech II Charisma Ltd., and Joint Benefit Group Limited, pursuant to customary equity commitment letters, and the proceeds from a committed loan facility from Standard Chartered Bank ( Hong Kong) Limited, pursuant to a debt commitment letter.

The Company's board of directors, acting upon the unanimous recommendation of the independent committee ("Independent Committee") formed by the board of directors, approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Independent Committee, which is composed solely of directors of the Company who are unaffiliated with any of Holdings, Parent, Merger Sub, the Buyer Group or any of the management members of the Company, exclusively negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

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