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Sinovac Biotech (NSDQ: SVA) upped its secondary stock issue to 10 million shares (from 8.65 million) and priced them at $5.75 each, a 6% discount from Wednesday night’s closing price of $6.11. The company said it expects net proceeds of $53.8 million ($62 million if the underwriters purchase an additional 1.3 million shares for overallotments). Sinovac’s business focus is on the currently hot vaccine sector.

When Sinovac announced the secondary, one week ago on January 21, its shares were selling for $7.51. Even though the company sought to buoy its stock price by increasing its 2009 guidance at the same time as it announced the impending increase in shares, the stock dropped $1.40 or 19% in the ensuing week. Thursday, in mid-morning activity, it is down another 16 cents to $5.96.

According to the press release, Sinovac will use its new capital to fund “the acquisition and expansion of production facilities, the enhancement of production lines, the research and development of product candidates, the expansion of product pipeline, and general corporate purposes (including an undetermined amount for potential acquisitions).”

Even though “acquisitions” was mentioned last – and in parentheses, as though it was an afterthought – that single category has a way of absorbing the majority of capital, especially in a company like Sinovac, that has become solidly profitable due to the increased revenues from its flu vaccine portfolio over the past year.

Disclosure: none.

Source: Sinovac's Secondary Offering Will Help Fund Acquisitions