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Nepstar Acquires 68 Drugstores from Ningbo New Century Medical Ltd.
2008-2-28
 

Nepstar has entered into a definitive agreement to acquire all of the 68 drugstores (including inventory and store equipment) owned by Ningbo New Century Medical Ltd. for cash consideration of RMB30 million (US$4.1 million). Nepstar expects to take over the operations of the acquired stores in March 2008, upon completion of the acquisition. After acquiring the New Century stores, Nepstar is expected to have a total of over 160 stores in Ningbo as of March 2008.

The New Century drugstore chain was established in 2002 and generated revenue of approximately RMB50 million (US$6.8 million) in 2007. It is one of the top three drugstore chains in Ningbo based on the number of outlets. New Century's stores are located mostly in newly developed, satellite districts of Ningbo, including Beilun, Ninghai, and Yinzhou Districts, where Nepstar does not currently have a strong presence. The growth of these new satellite districts has been driven by local government initiatives to boost local economies and position the districts in key growth industries. For example, Yinzhou, Ninghai and Beilun have become centers for apparel wholesaling, stationary wholesaling and ocean shipping, respectively.

Dr. Simin Zhang, Chairman of the board of directors of Nepstar commented, "This acquisition represents our first step towards our goal of consolidating the fragmented Chinese retail drugstore industry. We will continue to execute our strategy of deepening penetration in high growth cities where we already have a presence. The acquisition of New Century's outlets will extend our market leadership and strengthen Nepstar brand in this important region."

"We plan to continue to seek synergistic acquisition opportunities throughout China to complement our robust organic growth. We believe well- identified acquisition opportunities will allow us to rapidly expand our market share, leverage our central procurement platform, and enhance our long- term value," concluded Dr. Zhang.

 
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