East China Medicine "Yimei" Track Changes Suddenly: 20 Shareholders Of The Agent Subsidiary Of Hyaluronic Acid Go To Court And Cry To Break Up

With a civil complaint filed by the minority shareholders of the holding subsidiary, the "new story" of Huadong Pharmaceutical (000963. SZ) is about to turn into an "accident".

At the end of August 26, Huadong Pharmaceutical Co., Ltd. fell 9.94% and almost closed at 31.25 yuan / share. In a short trading day, its total market value shrank by 6 billion yuan.

On the evening of August 24, East China Pharmaceutical disclosed that it had recently received a civil complaint and a notice to participate in litigation served by the people's Court of Beilun District, Ningbo City. Huadong Ningbo Pharmaceutical Co., Ltd., a subsidiary of the listed company holding 51% of the shares (hereinafter referred to as "East China Ningbo"), and 20 natural person shareholders, such as Feng Yiying, Zhou Wenbin and ye Maohua, were the remaining 49% shares, At the same time, the listed company Huadong medicine was listed as the third person outside the case. At present, the case has not yet been heard.

According to 20 natural persons, "there are serious difficulties in the operation and management of East China Ningbo, and the continuous operation will cause great losses to the shareholders' interests, and request the court to order the dissolution of East China Ningbo Company".

The above-mentioned 20 natural persons stressed that "as a subsidiary of East China medicine, East China medicine has never regarded East China Ningbo as a" son ". Biological products, medical and beauty products and cold chain logistics are all wholly-owned and independent companies in operation, forming direct competition with East China Ningbo."

As for the difficulties of small and medium-sized shareholders in East China Ningbo, listed companies give a different view, "the expiration date of the operation period of East China Ningbo is the end of 2021. Before this date, there are disputes among shareholders of East China Ningbo on whether the company should be dissolved in advance". It believes that "it is not appropriate to dissolve East China Ningbo ahead of time".

What is the truth behind each side's insistence?

20 shareholders of the holding subsidiary request to dissolve the company

Huadong medicine, which is popular because of its frequent layout of medicine and beauty, may not have expected to be concerned by the market in the way of "internal strife".

In the above announcement, Huadong pharmaceutical pointed out that the reason for the dispute with the minority shareholders of East China Ningbo was that before the original business term of East China Ningbo expired on December 31, 2017, the natural person shareholder represented by Feng Xingfu (who held 31.5% shares of East China Ningbo through her daughter Feng Yiying) required the listed company to acquire 49% minority equity held by it in East China Ningbo to realize cash withdrawal, However, "both parties have been unable to reach an agreement due to the transfer consideration and performance commitment.".

Since 2018, the extension of the business term of Ningbo in East China can only be signed once a year under the actual control of Feng Xingfu and other natural person shareholders, which has seriously affected the sustainable operation and employee stability of East China Ningbo, resulting in a significant decline in the business growth rate of East China Ningbo in recent two years.

In addition, the listed companies initially found that Feng Xingfu, as the person in charge of the actual operation and management of East China Ningbo, obviously violated the relevant provisions of the listed company. In recent years, a large number of related party transactions occurred between the leading East China Ningbo and his personal investment related companies, which led to the formation of large accounts receivable in East China Ningbo; At the same time, it is also found that there are illegal activities in some asset transactions in Ningbo, East China. However, the management of Ningbo East China, represented by Feng Xingfu, refused to accept the unified management of listed companies, and refused to cooperate with the management audit and investigation of Ningbo in East China.

Based on the above reasons, listed companies believe that it is not appropriate to dissolve Ningbo in East China in advance.

In this regard, on August 26, the reporter of 21st century economic report repeatedly called the East China medicine and securities affairs department, but no one answered the phone.

Relatively, the protagonist of the other side of the event is not willing to be outdone.

From August 25 to 26, East China Ningbo issued clarifications on its wechat public account platform "Huadong Ningbo medicine" for two consecutive days, and did not recognize the statements of listed companies.

First of all, East China Ningbo did not accept the reasons for the unsuccessful equity acquisition. "On December 26, 2019, Huadong pharmaceutical and natural person shareholders reached a temporary price of 49% equity of RMB 11172 million, and Huadong pharmaceutical purchased the" letter of intent on promoting the disposal of natural person shareholders of East China Ningbo Pharmaceutical Co., Ltd. "with consideration of 30% cash and 70% new shares All natural person shareholders in Ningbo, East China, have completed all the preparatory work stipulated in the letter of intent for equity disposal before April 30, 2020. However, on May 5, 2020, all natural person shareholders received a notice from China Yuanda Group (the controlling shareholder of East China Pharmaceutical) and stopped the equity acquisition without any reason, However, the announcement of non listed companies said that "transfer consideration and performance commitment failed to reach an agreement.".

Secondly, East China Ningbo believes that the company's operation period will continue year after year after November 10, 2018, which is entirely due to the fact that Huadong Pharmaceutical (or the power behind the decision-making power of the management) uses the cover of acquisition negotiation to start and cultivate its wholly-owned medical and beauty business, leaving enough time for its medical and beauty business to "go to Ningbo in East China" Do enough writing.

What's more, East China Ningbo also raised objections to the announcement that "the management of East China Ningbo refused to cooperate with the listed companies in their management audit and investigation".

"The company does not reject the management audit requirements proposed by Huadong pharmaceutical, but can not accept the management audit directly involved by Huadong Pharmaceutical (even its superior shareholder Yuanda Group), and puts forward the requirement of entrusting a third-party organization for audit, but Huadong pharmaceutical refuses the third-party audit", according to Huadong Ningbo, "Huadong Pharmaceutical Co., Ltd There is obvious horizontal competition between the medical and aesthetic industry and East China Ningbo. In this context, the company has raised serious doubts about the use of non East China medical personnel (personnel of China Yuanda Group) to conduct management audit in East China Ningbo, and required the third party to conduct audit. Therefore, Huadong Ningbo has the right to refuse the data collection requirements of ECMP that touch the business information and trade secrets of ECMP.

On August 26, the reporter of the 21st century economic report called Ningbo, East China, and conveyed the intention of the interview. As of the time of publication, no reply has been received.

Ningbo, East China -- the key point for East China medicine to cut into medical beauty

The origin of Huadong medicine and its subsidiary, East China Ningbo, can be traced back to 20 years ago.

The 21st century economic reporter inquired about the historical announcement and found that in March 2001, East China medicine and the former Ningbo Jiansheng Biological Products Co., Ltd. (hereinafter referred to as "Jiansheng bio", the original name of East China Ningbo) signed an equity transfer agreement. The listed company made a cash contribution of 3.315 million yuan, transferred 51% of the shares of Jiansheng biological products, and renamed the company as Huadong pharmaceutical Ningbo Biological Products Co., Ltd.

Since then, Jiansheng biological Co., Ltd. has been renamed as "East China Ningbo Pharmaceutical Co., Ltd." in September 2015.

Huadong pharmaceutical said that Ningbo, a 51% controlled pharmaceutical commercial subsidiary of the listed company, is mainly engaged in the sales of biological blood products and the sales agent of Yiwan series hyaluronic acid of LG Life Sciences in China, and has obtained the agency right of botulinum toxin of jetema company in China.

"In 2013, Huachuang securities also mentioned in an in-depth research paper published on February 21, 2013, when Huachuang securities entered the field of medicine and the United States from hyaluronic acid (Yiwan) of LG company in South Korea.

Huadong pharmaceutical introduced the company's medical and American business in the annual report of 2020. On the one hand, Sinclair, a wholly-owned overseas subsidiary, is headquartered in the United Kingdom and holds a stake in Spain's high tech company. It has production bases in France, the Netherlands, the United States, Switzerland and Bulgaria, and promotes the sales of long-acting microsphere fillers for injection, hyaluronic acid, facial lifting and embedding thread in the global market Frozen fat dissolving and other products; On the other hand, Ningbo, a holding subsidiary in East China, currently acts as the general agent of South Korea's "Yiwan" hyaluronic acid products and Samus series of skin care products in the Chinese market.

But in East China Ningbo, as an important part of listed companies' layout of medical beauty, it has not been taken seriously.

East China Ningbo pointed out in the wechat official account article that "Huadong Ningbo is the pioneer of Huadong medicine's medical beauty business (started to operate LG Yiwan hyaluronic acid in 2013), and is also the main negotiation Party of East China medicine in acquiring Sinclair in the UK... As a subsidiary of East China medicine, it has its unique business advantages in biological products, medical and beauty products and cold chain logistics", "Huadong pharmaceutical has never regarded Ningbo in East China as a" son in law ". Biological products, medical products and cold chain logistics are all operated by wholly-owned and independent companies, forming direct competition with Ningbo in East China."

According to the data, in 2020, the audited revenue and net profit of Ningbo in East China will be 1.285 billion yuan and 123 million yuan respectively, down 22.88% and 35.64% year on year.

It is worth mentioning that, based on the total revenue of East China medicine in 2020 of 33.68 billion yuan and net profit of 2.82 billion yuan, the corresponding revenue and net profit contribution of Ningbo in East China accounted for 3.8% and 4.4% respectively, both less than 5%.

In addition, in the first half of 2021, the unaudited revenue of Ningbo, East China, was 569 million yuan, with a net profit of 50.33 million yuan, down by 2.87% and 26.3% respectively on a year-on-year basis (the net profit attributable to the company's consolidated statements was 25.668 million yuan).

Ningbo, East China, said that if the company's operation expires on December 31, 2021, if the shareholders can't reach an agreement on the operation extension, it will enter the legal liquidation stage. If the company is dissolved and liquidated, all its business will be terminated due to the dissolution. There is no arrangement to merge or integrate all the business originally operated by East China Ningbo into Huadong medicine.

However, the listed companies do not seem to be worried, saying, "if Ningbo in East China stops operating, the company is fully confident that it will be able to do a good job in the connection and integration of corresponding businesses. In the future, the company's medical and beauty business will continue to steadily advance in accordance with the established internationalization strategy of medical and American, and strengthen the international business development with Sinclair, a wholly-owned subsidiary of the United Kingdom, as the global medical and aesthetic operation center. ".

For the further development of the event, the 21st century economic reporter will continue to pay attention to it.