Deals and Financings
Luye Group, the parent of Luye Pharma (HK: 2186), is bidding to acquire Ethypharm, a privately held French pharma, at a price that could be as much as $800-$900 million. Luye faces competition on several fronts for control of Ethypharm, which is currently owned by PE firm Astorg Partners. Other investment companies are interested, as is the UK's Mundipharma, as well as several unnamed China pharmas, according to Bloomberg, which broke the story.
Wuhan Humanwell Healthcare (SHA: 600079) and PuraCap will acquire Epic Pharma, a New York state generic drug manufacturer, for $550 million. In a brief announcement, Humanwell said it would invest $270 million to create a US subsidiary, which would then own Epic. Formed in 2008, Epic bought a generic drug manufacturer previously owned by Sandoz. It produces a number of generic drugs and provides contract manufacturing services. In 2015, Epic said its revenues exceeded $120 million per year.
Zhongmei Healthcare, a group of private China hospitals, plans to stage a $150 million IPO in Hong Kong during Q2. In January, the Carlyle Group acquired a 15.7% stake in Zhongmei for a $64 million investment, implying a valuation of $408 million. Zhongmei, which will offer 25% of its shares in the IPO, owns three renal care hospitals, one aesthetic surgical hospital and two general hospitals. The company will allocate 30% of the proceeds toward further acquisitions.
Fujian Thai Hot Investment, a China holding company, closed its $102.5 million acquisition of a 51.5% stake in Alliance Healthcare Services (NYSE:AIQ), a company that operates diagnostic imaging and radiation therapy centers in the US. The deal was originally announced in September, but needed extra time to work out the details. Thai Hot plans to expand Alliance's business to China. Huang Qisen, founder and chairman of Fujian Thai Hot, will become Chairman of Alliance.
Yantai Dongcheng Biochemicals (SHZ: 002675) paid $69.8 million to acquire the China assets of Global Medical Solutions, a US company that makes nuclear medicine and imaging contrast products. GMS, which operates mainly in Asia Pacific, described the transaction as a strategic partnership that will be positive for GMS in the long term. In addition, GMS said it would continue to operate in China even though the sale included all of its current China operations. GMS did not specify any details about the synergism it expects between itself and Dongcheng.
AliHealth, a subsidiary of China e-commerce giant Alibaba (NYSE:BABA), will invest $35 million to acquire a 25% stake in China Resources Wandong Medical Equipment's (SHA: 600055) medical imaging unit. The unit, Wanliyun Medical Information Technology (Beijing), builds cloud-based big data medical imaging platforms along with cloud storage to support remote medical imaging services. AliHealth and Wanliyun will build a third-party imaging center to provide remote medical image diagnosing for patients, physicians and hospitals.
Affymetrix (NASDAQ:AFFX) decided to accept a lower takeover bid from Thermo Fisher Scientific (NYSE:TMO), rather than a higher offer from former Affymetrix executives that were backed by SummitView Capital, a China private equity firm. Thermo Fisher offered $1.3 billion for Affymetrix while Origin, a special purpose vehicle formed by Centillion executives, upped its bid to $1.6 billion. Affymetrix said it felt the Origen offer was too risky. Although Origin disagreed with the assessment, it withdrew its takeover proposal.
Sinovac Biotech (NASDAQ:SVA), a Beijing vaccine maker, has adopted a poison pill defense to prevent unwanted takeover attempts. The company's board authorized a distribution of preferred shares, which, if activated, would render the company too expensive to acquire. In early February, Sinovac received a privatization offer of $6.18 per share from management that values the company at $345 million. A few days later, an outside group of China investors/pharmas offered $7 per share or $390 million for Sinovac. The board is considering both proposals.
CITIC Private Equity Funds Management made a strategic investment of unspecified size in Beijing New Journey Cancer Hospital. Founded in 2011, Beijing New Journey was jointly established by Peking University Cancer Hospital and New Journey Medical Group, a company started by US private equity firm New Enterprise Associates. The goal of the hospital, a partnership between a public hospital and private capital, is to bring international expertise to China cancer care. NEA/Beijing New Journey owned 70% of the hospital before CITIC's funding.
GlaxoSmithKline (NYSE:GSK) will create a new R&D institute in Beijing that will address the public health threats of infectious disease and antibiotic resistance. GSK will budget $29 million for the project over the next three years and put over 20 researchers to work on the program. In GSK's vision, the project will start with its own R&D ability, while actively seeking participation from China academics, government, healthcare providers and regulators. The new research effort will be in addition to GSK's existing R&D efforts in Shanghai.
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