Sinopharm offers to take Hong Kong-listed China-TCM private in nearly US$3 billion deal
- Sinopharm, the parent of China-TCM, already holds a 32.46 per cent stake in China-TCM and has offered to pay HK$4.6 per share in cash to buyout the drug maker
- Sinopharm says it will not raise the offer price to take China-TCM private
A consortium led by state-owned pharmaceuticals giant Sinopharm has revived a take-private bid for China Traditional Chinese Medicine Holdings (China-TCM), the Hong-Kong-listed drug maker said on Wednesday, valuing it at HK$23.16 billion (US$2.96 billion).
China National Pharmaceutical, also known as Sinopharm, had in 2021 decided against a possible privatisation of China TCM.
Sinopharm, the parent of China-TCM, already holds a 32.46 per cent stake in China-TCM and has offered to pay HK$4.6 per share in cash to buyout the drug maker.
The offer price represents a 34.11 per cent premium to the traditional medicine maker’s closing price of HK$3.43 per share before trading in the stock was halted.
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The deal, if goes through, would be one of the biggest privatisation deal for a Hong Kong-listed firm since Haier Electronics’ US$5 billion acquisition in 2020.
Sinopharm has also indicated it will not raise the offer price to take China-TCM private.
The offer comes as the drug maker lags a surge in valuations for many mainland-listed Chinese medicinal firms in and around the Covid-19 pandemic.
“Whether the privatisation would be successful this time still depends on the outcome of negotiations among different parties, which is full of uncertainty,” Xinyao Wang, a Hong Kong and China healthcare analyst at Smartkarma, said in a note.
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The potential deal would add to a surge in strategic investors and buyout firms tapping Hong Kong for take-private opportunities. Buyers often cite undervalued shares as a reason for the deals.
Media reports had earlier emerged in 2022 over Sinopharm and its advisers preparing a potential offer of about HK$6 for each China-TCM share.
China TCM shares had jumped as much as 10 per cent to HK$3.43 on Wednesday, taking its market value to HK$16.9 billion.
The drug maker had in late January said it expects its 2023 net income to likely increase by 85 per cent to 95 per cent.
