China Health Labs & Diagnostics Ltd. Receives Proposal to Privatize

TSX-V:CHO

TORONTO, Oct. 24, 2013 /CNW/ - China Health Labs & Diagnostics Ltd. ("China Health" or the "Company") (TSXV:CHO) announced that its board of directors has received an unsolicited non-binding proposal from Century Delight Investment Limited ("Century Delight"), to acquire all of the outstanding common shares of the Company not already owned by Century Delight for cash consideration of $0.62 per share (the "Transaction Proposal").  Century Delight is a company indirectly owned and controlled by Mr. Shiping (Wilson) Yao, the Company's President and Chief Executive Officer and a member of the Company's board of directors.  The Consideration offered under the Transaction Proposal represents a premium of approximately 44% over the closing price of the Company's shares listed on the TSX Venture Exchange on October 23, 2013.  Under the Transaction Proposal, the privatization is proposed to be effected by way of a share consolidation under the Companies Act (Cayman Islands).  Century Delight owns, or has control or direction over, 47,009,266 common shares representing approximately 72% of the Company's 65,606,686 common shares outstanding.

A special committee of independent directors (the "Special Committee"), comprised of Paul Haber (Chair), Hong Chang, Kim Oishi and Yumin Zhuang, will consider and make recommendations regarding the Transaction Proposal. The Special Committee has already engaged Evans & Evans, Inc. as its independent valuator and financial advisor and to prepare a valuation report and fairness opinion with respect to the Transaction Proposal.

The Transaction Proposal is subject to a number of conditions including confirmation of financing. Century Delight has informed the Company that it is seeking financing, but that it has not yet entered into a binding financing agreement.  Any transaction under the Transaction Proposal would also be subject to a number of conditions including receipt of all regulatory and shareholder approvals including the approval of at least a majority of the votes cast by minority shareholders (other than Mr. Yao and his affiliates and associates and other joint actors) of the Company.

The Company has only received the Transaction Proposal and the Company's board of directors has made no determination as to the Company's response to the proposal.  The Transaction Proposal is non-binding and there is no assurance that any transaction will be completed or, if completed, on the terms as proposed. The Company will provide further updates as material information becomes available.

About China Health Labs & Diagnostics Ltd.

China Health, operating in China as the Biochem Group, is a leading diagnostic lab solution provider for the public healthcare industry in China. The Company develops and sells Biochem Group branded and third-party medical diagnostic products and services to diagnostic facilities in China.  Customers include large urban hospitals, rural hospitals, Chinese military and rescue operations, the Beijing government and third-party distributors.

In 2012, China Health had revenue of approximately $45.8 million, and intends to expand its business by focusing its efforts on expanding its sales network in three areas where it provides proprietary solutions, has limited competition and that are supported by Chinese government policy and budgets: BK Clinlab total lab solutions for rural hospitals and clinics, POCT solutions for military and emergency rescue services, and food safety solutions for large cities in China.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD LOOKING INFORMATION

This news release contains forward-looking statements and information that are based on the beliefs of management and reflect China Health's current expectations.  When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.  The forward-looking statements and information in this news release includes information relating to the method of effecting the privatization, the consideration and making recommendations by the Special Committee regarding the Transaction Proposal, and the expansion of the Company's business by focusing on expanding its sales network to areas where it has proprietary products, limited competition and strong government support.  The forward-looking information is based on certain assumptions, which could change materially in the future, including the assumption that the Company's products and services, operations, market, marketing plans and strategies, competitive conditions, future developments and proprietary protections continue as projected.  Such statements and information reflect the current view of China Health with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.  By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the risk that the Transaction may be withdrawn, the Company may not be able to expand its business as expected through its sales network in any of the areas in which it has proprietary products, limited competition and strong government support.  These and other risks are further described under "Risk Factors" in the Company's management's discussion and analysis dated April 30, 2013, which is available on SEDAR and may be accessed at www.sedar.com.  When relying on China Health's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.  China Health has assumed a certain progression, which may not be realized.  It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events.  However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF CHINA HEALTH AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE CHINA HEALTH MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

SOURCE: CHINA HEALTH LABS & DIAGNOSTICS

Paul Haber
Chair of the Special Committee
China Health Labs & Diagnostics Ltd.
T:  1-416-318-6501
Email:  [email protected]