Genex said that the move was part of a strategy to develop into a company offering products lines internationally, as well as to expand its focus beyond its current activities in orthopaedics.
Vitamin B1 or thiamine is widely used in the food, nutritional supplement and pharmaceutical industries.
Zhongjin has unaudited revenues of approximately $16 million (€13m) and net income of around $3 million for the fiscal year ended 2003. It is the second largest manufacturer of vitamin B1 on a global basis based on annual production output, which is currently 1,500 metric tons.
Genex is particularly interested in its international distribution channels. Zhongjin currently exports 90 per cent of its products to countries outside China, including to the US and European markets. At present, Genex's orthopaedics product - used to help the healing of bone fractures - is distributed only in mainland China.
Under the terms of the proposed acquisition, Genex would acquire 100 per cent of Zhongjin in a stock transaction valued at no more than four times the audited net income of Zhongjin for the fiscal year ended 2003.
Fuzhi Song, chairman and majority shareholder in Genex, is the sole shareholder of Zhongjin.