Sunzen Biotech Bhd has entered into a share sale agreement (SSA) with the vendors of Ecolite Biotech Manufacturing Sdn Bhd (Ecolite) for the acquisition of 70% of the total number of issued shares in Ecolite, for a purchase consideration of RM12,050,360 (Proposed Acquisition” to be wholly satisfied by the allotment and issuance of 37,657,375 new ordinary shares in SUNZEN at an issue price of RM0.32 per Sunzen Share.
In conjunction with the Proposed Acquisition, the Group intends to undertake the proposed diversification of the business activities of SUNZEN and its subsidiaries to include the manufacturing and trading of traditional Chinese medicines (“TCM”) and herbal health foods and beverages (Proposed Diversification).
The Proposals are subject to the approvals from Bursa Securities and the Shareholders of SUNZEN at an extraordinary general meeting (“EGM”) that is yet to be convened.
Ecolite is a health and wellness company that is primarily involved in the manufacturing and trading of traditional Chinese medicines and herbal health foods and beverages. Their product offerings include; bird’s nest, The Joy of Life collagen drink, Pu Yao Jing tonic, essence of chicken, essence of fish, Pi Pa Gao cough syrup, Bai Foong Wan, food supplements, dried herbs and more.
The audited consolidated revenue and profit after tax of Ecolite for the financial year ended 30 September 2016 stood at RM31.9 million and RM1.72 million respectively.
The increase in self-health care as consumers desire for a healthy lifestyle and choose to be more proactive about their own health has led to a growing interest and continuing demand in traditional and complementary medicine globally. Traditional and complementary medicine is used not only to treat diseases, especially chronic diseases; it is also widely used in disease prevention, health promotion and health maintenance. (Source: WHO Traditional Medicine Strategy, 2014-2023, World Health Organisation)
Taking into account these factors, this venture offers good growth opportunities for the Group in the long term and as such, the Group believes that the diversification into the manufacturing and trading of TCM and herbal health supplements and beneficial beverages is an attractive business proposition. The Group plans to leverage on its acquisition of the Ecolite Group with its biotechnology expertise to grow the Ecolite’s TCM and herbal health foods and beverages business.
In addition to the above, Sunzen will also gain a foothold in exporting bird’s nests into the People’s Republic of China (“China”). As at 2016, the Ecolite Group through Yanming (Ecolite’s 70% owned subsidiary) is one of 19 companies in Malaysia approved by the Chinese authorities to export raw clean edible bird’s nests into China.
Sunzen’s Chief Executive Officer, Hong Choon Hau said, “This is the first step in our strategic plan to turnaround the Group. We are confident that this venture will contribute positively to our future performance.”