SCHAUMBURG, Ill., May 6, 2013 (GLOBE NEWSWIRE) -- Sagent Pharmaceuticals, Inc. (Nasdaq:SGNT), a leader of specialty pharmaceutical products with an emphasis on the injectable market, today announced an agreement to acquire the 50% interest of its joint venture partner, Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd. formerly Chengdu Kanghong Technology (Group) Co. Ltd. ("Kanghong"), in the Kanghong Sagent (Chengdu) Pharmaceutical Corporation Limited ("KSCP") joint venture, for $25 million, payable in installments through September 2015. Upon completion of the acquisition, KSCP will become a wholly-owned subsidiary of Sagent.
"We originally formed our joint venture in 2006 to construct and operate an FDA and current Good Manufacturing Practices compliant, sterile manufacturing facility in Chengdu, China," said Jeffrey M. Yordon, chief executive officer and chairman of the board of Sagent. "Our partnership with Kanghong was instrumental in helping us navigate the construction and start-up of this facility, which provided us with dedicated manufacturing capacity utilizing state-of-the-art isolator technology for aseptic filling. Over the last couple of years, however, our business model has evolved and we recognized that having full control of the facility better serves Sagent's long-term strategic goals, including a strategy of additional investment in product development and capacity expansion. The facility was inspected by the FDA in 2012 and has been deemed acceptable for product approvals, which we expect in 2013. We are confident that this is an opportune time for Sagent to invest further in the facility to attain full control."
The acquisition is subject to customary closing conditions, including approval by The Chengdu Hi-Tech Industrial Development Zone Bureau of Investment Services. Sagent anticipates closing the transaction over the next several months.Upon completion of the acquisition, KSCP's assets and liabilities, as well as its financial results, will be reported on a consolidated basis with Sagent, rather than using the equity method of accounting to report Sagent's share of KSCP's net income or net loss all in accordance with US GAAP. Sagent currently anticipates the income statement consolidation will result in an incremental annual cost of $6 to $8 million through 2015.