ShangPharma wins investor vote for go-private plan

Chinese CRO ShangPharma ($SHP) won shareholder approval for its effort to get off the New York Stock Exchange and go private, a plan that involves selling the company to private equity firms and some of the CRO's leadership.

The merger agreement values ShangPharma at about $173 million, and, with an investor OK secured, the CRO says it'll complete the process this quarter.

Once the deal is final, the CRO will be owned by ShangPharma Holdings Limited, made up of Chinese firms ChemExplorer Investment Holdings, ChemPartner Investment Holdings, Joint Benefit Group, Han Ming Tech Investment and TPG. The first two are owned in part by ShangPharma CEO Michael Xin Hui, while Han Ming is owned by Kevin Penghui Chen, one of the company's directors.

Last quarter, the Shanghai-based company grew its revenue by 10.6%, but a spike in costs brought net income down to $1.6 million, a 39.5% drop. But CFO William Dai said the company is being selective with its spending, expanding capabilities in biologics and other growing markets while shedding unnecessary functions.

If all goes according to plan and ShangPharma is a private CRO in the next few months, the company will retain its new R&D facilities and its client list, which includes Eli Lilly ($LLY) and GlaxoSmithKline ($GSK).

- read ShangPharma's announcement

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The money will be used to expand its footprint in both China and the U.S., including a new R&D operation in Boston.