KUALA LUMPUR (Mar 10): Chemical Co of Malaysia Bhd's (CCM) shareholders have given their nod to the group's plans to sell six pharmaceutical units in Malaysia, the Philippines and Singapore to its 73.7%-owned subsidiary CCM Duopharma Biotech Bhd for RM133.3 million.

CCM group managing director Leonard Ariff Abdul Shatar is confident that the deal will benefit both CCM and CCM Duopharma and bring value to their shareholders.

“We are confident that the acquisition by CCM Duopharma Biotech will unlock the value and full potential of our investments in our pharmaceutical arm,” he told a press conference after the group's extraordinary general meeting today.

The disposal will see CCM (fundamental: 0.35; valuation: 1.2) part with six subsidiaries namely CCM Pharmaceuticals Sdn Bhd, CCM Pharma Sdn Bhd, Innovax Sdn Bhd, Upha Pharmaceutical Manufacturing (M) Sdn Bhd, CCM International (Phillipines) Inc and CCM Pharmaceuticals (S) Pte Ltd to CCM Duopharma and its subsidiary, Duopharma Malaysia Sdn Bhd.

To pay for the acquisition, CCM Duopharma will undertake a renounceable rights issue of 139.48 million new shares at RM1.40 each, to raise as much as RM195.27 million.

CCM plans to use RM132.5 million of the sale proceeds to reinvest in its subsidiary, including the subscription of CCM Duopharma’s rights issue, with the remaining RM800,000 for estimated expenses.

“In addition, CCM will utilise the settlement of inter-company advances from the six subsidiaries totalling RM111.8 million for repayment of its bank borrowings,” said Leonard.

As at 4.39pm: CCM shares were down 3.85% at RM1, for a market capitalisation of RM463.72 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)