Yunfeng, Alibaba agree $1.4b iKang take-private
The protracted pursuit of Chinese healthcare services provider iKang Healthcare Group appears to have ended, with Yunfeng Capital and Alibaba Group agreeing to buy the business at a valuation of around $1.4 billion.
They will pay $20.60 per share for all outstanding American Depository Shares (ADS) in the NASDAQ-listed company, according to a filing. This represents a 15% premium to the March 9 closing price, the last trading day before iKang received the take-private proposal. The deal will be financed by $1.15 billion in equity from Yunfeng and Alibaba and rollover equity from the company founders.
As of June 2016, Ligang Zhang, iKang’s CEO and chairman, held a 12.83% stake in the company, while Boquan He, the vice chairman, had 13.10%. Between them they have 43.1% of the voting power.
Zhang initially teamed up with FountainVest Partners in August 2015 to submit a bid of $17.80 per share. A PE-backed consortium that included its industry rival Meinian Onehealth then offered $22.00 per share, prompting iKang's management to announce a right issue, or "poison pill" strategy, intended to thwart the rival bid. The Meinian consortium responded by improving its bid.
The Zhang-led group did not submit a higher offer but brought in Alibaba, Ontario Teachers' Pension Plan (OTPP), China Life, Legend Capital, New China Capital International and LTW Capital Jaguar Investment to join its consortium. The rival groups ended up withdrawing their bids in June 2016 when Yunfeng said it was willing to pay $20.00-25.00 per share.
Set up in 2004, Beijing-based iKang provides medical examination services through 89 self-owned medical centers in 27 cities, as of June 6. Outpatient services and dental treatments are also provided by a minority of these centers. Third-party service providers are used in 150 cities.
The company reported revenue of $370.8 million in 2016, up from $290.8 million the previous year. It also generated a net profit of $16.5 million, down from $27.4 million in 2015.
Yunfeng was established by Jack Ma, co-founder of Alibaba, and David Yu, founder of Target Media. The private equity firm previously teamed up with Alibaba on the privatization of Chinese mobile dating app Momo.
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