CITIC PE completes $370m 3SBio take-private
Chinese biotechnology firm 3SBio will delist from NASDAQ after shareholders voted in favor of a privatization bid from a group led by the company’s CEO and CITIC Private Equity. The deal, which values 3SBio at $370 million, is the eighth successful PE-backed take-private of a US-listed Chinese company in the last two years.
According to a regulatory filing, shareholders agreed to an offer of $16.70 per share for all outstanding American Depository Shares (ADS). The buyers already owned approximately 18% of the company.
The initial bid was $15 per share and this was subsequently increased to $15.40 at which point it won board approval. However, OrbiMed Capital, one of 3SBio's largest shareholders, came out in opposition to the bid in April, noting that a third party had expressed interest in buying the company at $18-20 per share and that selling to an unaffiliated third party would likely generate better value.
The revised offer represents a premium of 10% to 3SBio's closing price on April 19, the last day of trading prior to the announcement of a new proposal from the buyer consortium.
The transaction will be financed through a combination of debt, equity and cash. CITIC Private Equity will provide the equity portion through CPE China Fund, a $990 million vehicle that closed in 2011, while CITIC Bank International will serve as lead arranger for the debt financing as well as acting as one of the lenders. The other consortium members will contribute rollover equity.
3SBio develops and manufactures a range of drugs used to treat cancer, kidney disease, inflammation and infectious diseases. Its products are primarily sold in China. The company's headquarters and manufacturing facilities are based in Shenyang. It posted a net income of RMB108.6 million ($17.2 million) in 2011 off revenues of RMB541.6 million. This compares to income of RMB81.3 million in 2010.
Within the last two weeks, the $3.7 billion privatization of Focus Media has also been completed, supported by a PE consortium comprising FountainVest Partners, The Carlyle Group, China Everbright and CITIC Capital Partners. A TPG Capital-backed take-private of ShangPharma, valued at $173 million, closed in March.
A further 12 such deals are still underway. Five have received board approval since the start of the year.
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