Vivo, Advantech invest $87m in Sinovac as take-private is abandoned

Vivo and Advantech each bought 5.9 million shares for $7.35 apiece, representing an aggregate 16.6% stake in Sinovac, according to a filing. The company said the proceeds would go toward improving its research capabilities and building additional production facilities to support the development and commercialization of vaccines.

Sinovac was founded as Tangshan Yian in 1993 and listed in the US through a reverse merger in 2003. Seven years later it moved to NASDAQ. The company produces a range of vaccines used to treat infectious diseases such as hepatitis, influenza, and mumps. Most of its sales come from three drugs, two of which target hepatitis and the third, influenza.

The take-private was agreed in June 2017 with a consortium that included SAIF Partners – which owned 18.82% of the company as last December – and C-Bridge Capital as well as Vivo and Advantech. Weidong Yin, chairman and CEO of Sinovac, also took part. They were poised to pay $7.00 per share, valuing Sinovac at approximately $402 million.

This deal was expected to end a contentious bidding process. SAIF and Yin originally offered to pay $6.18 per share in February 2016 only for a group of investors featuring China International Capital Corporation (CICC) and several domestic pharmaceutical firms to counter with an offer of $7.00.

In response, Sinovac launched a rights plan that would see additional stock issued to existing shareholders if a prospective buyer built up a stake of 15% of more. A similar “poison pill” strategy was employed by iKang Healthcare Group in 2015, after a PE-backed privatization launched by the company’s chairman was challenged by a consortium featuring a rival Chinese healthcare group.

Sinovac’s sales came to $174.3 million in 2017, up from $72.4 million the previous year. Over the same period, the company swung from a net loss of $596,000 to a net profit of $36.7 million.

Vivo, which has offices in the US and China, closed its latest early-stage cross-border fund in 2016. It also has a growth and late-stage vehicle that closed at $750 million in 2015. Advantech is one of two parallel entities – the other is Redview Capital – formed following the restructuring of Chinese GP New Horizon Capital. They are seeking a combined $1.5 billion for their latest funds.

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