Biostar Pharma (BSPM) Signs LOI to Acquire Xianyang Yongsheng Health Products

September 22, 2016 8:05 AM EDT

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Biostar Pharmaceuticals, Inc. (Nasdaq: BSPM), a PRC-based manufacturer of pharmaceutical and health supplement products, and Xianyang Yongsheng Health Products Co., Ltd., a privately held PRC-based health product manufacturer located in Xianyang, China ("Xianyang Yongsheng"), announced today that they have entered into a non-binding Letter of Intent under which Biostar intends to acquire 100% of equity interest in Xianyang Yongsheng in exchange for (i) a cash payment, the amount of which is to be determined following completion of the due diligence review of the target, and (ii) issuance of shares of Biostar's restricted common stock, subject to regulatory limitations. The contemplated acquisition is subject to completion of due diligence review, customary definitive documentation and requisite corporate and regulatory approvals. The final terms of the proposed acquisition will be available upon the execution of the definitive documents. The companies seek to complete this transaction in the second half of 2016.

Xianyang Yongsheng has three production lines, including health "Yuye" wine (a popular brand in the PRC market), tea and capsules, and maintains a 24-acre Chinese herbal medicine ecological park.

Mr. Wang Ronghua, the Chairman of Biostar, commented, "We have been following the developments of the health industry and it appears that the consumer interest for health products based upon the principles of the traditional Chinese medicine have been increasing in recent years. This contemplated acquisition is aimed at increasing the Company's R&D development and productions capabilities as well as at improving the profitability of the Company's current product line."

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