PE consortium makes $4.6b take-private bid for China Biologic
Centurium Capital, CITIC Capital and Hillhouse Capital are part of an investor group targeting a $4.6 billion take-private of China Biologic – just over a year after committing new equity to the US-listed company to protect it from other would-be acquirers.
The three private equity firms, together with Temasek Holdings, Parfield International and Hong Kong-listed medical device manufacturer PW Medtech Group, are offering to buy all outstanding shares in China Biologic for $120 apiece, according to a filing. This represents a 16.8% premium to the September 17 closing price. The stock closed up 10.5% at $113.99 on September 19.
The consortium members collectively own 58% of China Biologic, which would be rolled over into the acquisition vehicle, leaving $1.93 billion worth of shares to be bought from other investors. Some of this is expected to take the form of debt funding.
Centurium, CITIC, Hillhouse and PW Medtech, China Biologic’s largest individual shareholder, subscribed to $590 million in new shares in August 2018. This came two months after CITIC submitted a take-private offer of $110 per share and a consortium including CDH Investments, GL Capital, and David Gao – who served as China Biologic’s CEO for about six years until July 2018 – made a bid of $118 per share. CITIC withdrew its bid, while the competing offer was rejected.
Following that investment, PW Medtech owned 16.08% of China Biologic, while Centurium, CITIC and Hillhouse had 7.76%, 6.82% and 6.63%, respectively. Centurium was the largest contributor to the deal, putting in $307.7 million, and the PE firm has since increased its holding to 14.4%, or 5.5 million shares. There is an agreement to buy a further one million shares from PW Medtech.
Centurium’s founder is David Li, who was previously China head at Warburg Pincus. He was involved in several investments by Warburg Pincus in China Biologic from 2010, but the firm gradually exited its position in recent years. Li sits on the company's board.
China Biologic produces plasma-based biopharmaceuticals for the prevention and treatment of life-threatening diseases and immune-deficiency related diseases. It manufactures 20 different dosage forms, but most of the revenue comes from human albumin, which is used to treat conditions such as blood loss trauma, and intravenous immunoglobulin. Products are distributed to about 600 hospitals and clinics across China.
The company, which was founded in 2002 and listed on NASDAQ in 2009, generated $466.9 million in revenue in 2018, up from $370.4 million the previous year. Over the same period, net profit rose from $82.2 million to $147.9 million.
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