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China Cord Blood Corporation (NYSE: CO) has acquired a 19.92% equity interest in Shandong Cord Blood Bank (SCBB) for $20.5 million, which will be paid in cash. China Cord Blood already projects an investment yield in this year of 5% or about $1 million from the purchase. More importantly, China Cord Blood also has right of first refusal on future equity interests in SCBB.

SCBB holds the cord blood collection license for Shandong Province, an eastern province in China that is the third most populous province in China with 92 million people. China Cord Blood called it an “affluent” area.

In November 2009, China Cord Blood listed its shares on the New York Stock Exchange and simultaneously completed a secondary offering of 3.3 million shares that raised $20 million in new cash.

China Cord Blood already owns cord blood collection licenses for Beijing and Guangdong. The PRC grants only one cord blood collection license for each major area. Six licenses have been granted to date, and China Cord Blood is the only entity to hold two of them. It clearly plans to grow its business through expansion into new areas as well as organic growth within its licensed territories. Golden Meditech, a China-based healthcare company traded on the Hong Kong Exchange, owns 44% of CCBC.

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Source: China Cord Blood Grows Business Through Expansion Into New Areas