What’s new: Two Chinese drug store giants have gone on the defensive after Reuters reported they were in “advanced talks” to merge via a share swap that would create the country’s largest pharmacy operator by revenue.
Shenzhen-listed Yixintang Pharmaceutical Group Co. Ltd., based in Yunnan province, told the bourse in a statement late Monday that the report it would merge with Laobaixing Pharmacy Chain JSC (LBX Pharmacy) was “untrue” and that it has no information to disclose.
Also on Monday, LBX Pharmacy head Wang Li told press that the story was “not at all true, purely a rumor,” the Beijing News reported.
The Reuters report, which cited three anonymous sources familiar with the matter, said the talks had been going on for three months.
The background: Tencent Holdings Ltd., which became a strategic partner of LBX Pharmacy when it took a 1% stake in the company earlier this year, had blessed the deal as it would help with online-offline integration and drive traffic through WeChat, according to the Reuters report, which was published on Monday.
LBX Pharmacy, which is better known as Laobaixing, has a market cap of about $4.3 billion, while Yixintang is worth around $3.5 billion.
Laobaixing made about $1 billion in revenue in the first half of 2020, while Yixintang made about $900 million, according to the report.
Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)
.png?w=600)
