CITIC PE, 3SBio agree North America acquisition

3SBio said in a filing that the deal is part of a broader push into the North American market. CITIC PE will have a 49% interest in the joint venture acquisition vehicle and contribute at least $105.1 million in cash to the deal, while 3SBio will take 51% and put in $109.4 million. The rest of the deal will be financed through various debt instruments.

The purchase price for the CDMO business is $290 million, but the buyers will also assume responsibility for the target’s debt and they have committed to funding the construction of a manufacturing facility for plasma-related therapeutic products.

CITIC PE has been granted a put option under which it can sell all or part of its interest to 3SBio after four years. The pricing of the option will be based on the private equity firm’s aggregate capital commitment to the joint venture, dividends declared but not yet paid by that point, and an annual return of 10% compound interest from the capital commitment.

Therapure was established as a CDMO in 2008 by Canada-based GP Catalyst Capital Group. It subsequently entered the plasma protein therapeutics space and started developing its own drugs that are used to treat liver cancer, anemia and hepatitis C. The CDMO business generated C$84.6 million ($68.2 million) in revenue last year, up from C$54.4 million in 2015. Net profit increased from C$608,062 to C$12.4 million over the same period.

Catalyst Capital will retain ownership of Therapure’s plasma protein and therapeutics assets, although it said that 3SBio will get some rights to products and technologies for application in the Chinese market.

3SBio wants to combine Therapure’s CDMO business with two other assets it has acquired: Italy-based contract pharmaceutical manufacturer Sirton and biological drug producer Sunshine Guojian. The company said it continues to look for strategic cooperation and acquisition opportunities that can expand its global presence and biopharmaceutical technology capabilities.

“Over 340 biologics professionals in North America focusing on operations and management, market development, R&D and manufacturing are expected to join 3SBio, which is a big step forward in our strategy to expand our talent pool and establish global presence. The acquisition effectively integrates our mammalian cell culture capabilities and Therapure's downstream purification and plasma source technologies,” said Jing Lou, chairman of 3SBio, in a statement.

Lou and CITIC PE completed a $370 million privatization of the business – which was then listed on NASDAQ – in June 2013. The private equity firm subscribed to a convertible note issued by 3SBio worth $154.4 million, while China CITIC Bank International provided a $100 million term loan.

3SBio re-listed in Hong Kong in June 2015, raising HK$5.51 billion ($711 million). CITIC PE made a partial exit through the offering, realizing around HK$1.1 billion. It currently owns approximately 24.5% of the company.

3SBio develops a range of pharmaceutical products for the China market, with a particular focus on cancer and kidney conditions. Its core products, Tpiao and Epiao, are used to treat bleeding conditions arising from chemotherapy treatment. Revenue came to RMB2.79 billion ($427 million) in 2016, up from RMB1.67 billion the previous year, while net profit rose to RMB714.2 million from RMB526.2 million.

CITIC PE’s initial investment in 3SBio came from its debut US dollar-denominated fund, which closed at $990 million in 2011. The private equity firm will make its contribution to the Therapure deal through that fund’s successor. The vehicle closed at $1.3 billion in 2015.

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• Topics
• Greater China
• North America
• Healthcare
• Buyouts
• Exits
• China
• Canada
• Citic Private Equity