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Chinese CRO ShangPharma looks to go private

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After months of rumors, ShangPharma ($SHP) is pulling the trigger on a deal that will take it private, creating a parent company that unites private equity firms and some of the CRO's leadership.

The deal, which values ShangPharma at $173 million, creates 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 current CEO Michael Xin Hui, while Han Ming is owned by Kevin Penghui Chen, one of ShangPharma's directors.

Pending shareholder approval, ShangPharma expects the deal to close in the second quarter of this year, and the final price tag comes in a little below the estimated $176 million projected in August, when word of the plans first surfaced.

In the last quarter, ShangPharma took a 39.5% drop in net income, as a spike in costs wiped out 10.6% revenue growth. The CRO upped its spending 9.4% in the third quarter, and while that torpedoed its net gains, the company's investment in new facilities and technologies will help it snag big-name clients in the future, CFO William Dai has said.

Once ShangPharma goes private, it will retain its state-of-the-art biologics operation and its Big Pharma client list, which includes Eli Lilly ($LLY) and GlaxoSmithKline ($GSK).

- read the statement

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