Hony supports $505m take-private of Simcere Pharmaceutical

New Good Management, a vehicle controlled by Simcere chairman Jinsheng Ren, and Hony-owned Assure Ahead Investments have offered to pay $9.56 per share in cash for all outstanding American Depository Shares. It represents a 20.1% premium to Simcere's March 8 closing price. The company's board has appointed a special committee to consider the bid.

According to regulatory filing, the consortium is confident that it will secure sufficient debt and equity capital to support the acquisition.

New Good Management owned 36% of Simcere as of February 2013. The company's 2011 annual report shows that Hony held a 17% stake while Trustbridge Partners and Fosun Industrial had 11.2% and 7.6%, respectively.

Simcere, which was founded in 1995, manufacturers branded pharmaceuticals for distribution in China, focusing on first-to-market generic and innovative treatments. Its portfolio spans 47 principal products, including anti-stroke medication Bicun and anti-cancer treatment Endu. Simcere entered into a strategic partnership with Merck in 2011 to co-promote and distribute medicines in China.

The company restructured offshore in 2006 and sold a 24.49% stake to Assure Ahead - at the time described as a joint investment vehicle between Hony and Goldman Sachs - for $20.6 million the same year. The Chinese GP participated via its second fund, taking a 21% interest.

Simcere raised $226 million through an IPO on the New York Stock Exchange in 2007. Trustbridge acquired a 9.3% interest in the company one year later.

Simcere reported a net loss of RMB14.4 million ($2.3 million) in 2012, down from a profit of RMB151.8 million the previous year. Revenues remained around RMB2 billion, but there was a RMB97.2 million impairment charge in 2012 as a result of a write-down on assets acquired through the 2009 purchase of Jiangsu Quanyi Biological Technology.

Between April 2010 and November 2012, a total of 49 take-private transactions were announced, according to Roth Capital Partners, with 19 reaching a close, four terminated and 26 in process. The last 12 months have seen significant activity: 10 deals were underway at the start of 2012, rising to 20 by the end of it.

Five private-equity backed deals have closed and AVCJ has records of 13 still in progress, nine of which were announced from the second half of 2012 onwards. Seven of these have received board approval, most recently Morgan Stanley Private Equity Asia's $147 million buyout of Feihe International.

 

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• Topics
• Buyouts
• Healthcare
• Greater China
• North America
• China
• USA
• Hony Capital
• healthcare
• buyout
• Trustbridge