Pharmachem Offer Under Consideration by Forbes Medi-Tech

VANCOUVER, British ColumbiaForbes Medi-Tech (OTCBB: FMTI), the struggling marketer of Reducol, finds itself being courted by two East Coast firms, announcing the companys Board of Directors is officially considering a $1.9 million acquisition offer from Pharmachem Laboratories, only weeks after it announced a $1.4 million asset purchase agreement was reached between Forbes and Marco Hi-Tech (MHT). The offer from Pharmachem, Kearny, N.J., is a cash consideration of $1.9 million for substantially all the assets of FMTI.

According to Forbes Medi-Tech, the Pharmachem offer is more favorable to the FMTI shareholders and therefore qualifies as a superior offer," as defined in the MHT asset purchase agreement. Under those terms, MHT does have the right to make an offer as favorable to the shareholders as the Pharmachem offer, within five business days.  If MHT does not make another offer, the Forbes Medi-Tech board will consider whether it should withdraw its recommendation of the MHT asset purchase agreement to enter into a definitive agreement with Pharmachem. However, the asset purchase agreement with MHT is in effect as of July 29, 2010.

In either event, Forbes plans to liquidate its affairs after the acquisition, distributing net proceeds to its shareholders. If the sale is completed at the $1.9 million level, those proceeds will be up slightlyin the range of $0.14 to $0.19 per share, compared to $0.08 to $0.13 per share at the $1.4 million levelto be distributed approximately six months after the sale is completed.

Forbes is convening a special meeting of shareholders in mid-August to approve the asset sale and liquidation, both of which have been recommended by the companys board of directors. The moves require a two-thirds approval of shareholders; the president, CEO, board members and senior officers have indicated their intent to vote for the sale and liquidation. Assuming both pass, Forbes common shares will be cancelled and de-listed from the OTCBB, likely by the first quarter of 2011.