TPG and Shanghai Fosun Pharmaceutical agree to acquire Chindex for $369 mln

TPG and Shanghai Fosun Pharmaceutical have agreed to acquire Chindex International for approximately $369 million. According to terms of the agreement, the buyers will purchase all outstanding shares of Chindex’s common stock for $19.50 per share in cash. The transaction is expected to close in the second half of 2014. Morgan Stanley is serving as financial advisor to Chindex on the transaction while Goldman Sachs is advising TPG. Chindex is a American healthcare company that provides healthcare services in China.

PRESS RELEASE

BEIJING and BETHESDA, Md., Feb. 17, 2014 /PRNewswire/ — Chindex International, Inc. (NASDAQ: CHDX) (“Chindex” or the “Company”), an American healthcare company providing services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics, today announced that it has entered into a definitive merger agreement with a buyer consortium (the “Buyer Consortium”) of an affiliate of TPG (together with its affiliates, “TPG”), an affiliate of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun”), and Ms. Roberta Lipson, the CEO of the Company, in a transaction having an implied equity value of approximately $369 million.
Under the terms of the merger agreement, which has been approved by the Company’s Board upon the recommendation of the Board’s Transaction Committee of independent and disinterested directors, the Buyer Consortium will acquire all of the outstanding shares of Chindex’s common stock for $19.50 per share in cash. This price represents an implied premium of approximately 14% over the current market price, 17% over the volume weighted average trading price for the last 30 days, and 86% over the closing share price since the formation of the Transaction Committee on December 26, 2012. The transaction will result in Chindex becoming a private company.
Kenneth A. Nilsson, the Chairman of the Board and the Chairman of the Transaction Committee of Chindex, said, “The Transaction Committee and its advisors conducted disciplined, independent and extended negotiations with the Buyer Consortium to ensure the best outcome for our unaffiliated stockholders. This is an opportunity for our unaffiliated stockholders to recognize a substantial return on their investment in Chindex despite the low liquidity of our shares in the equity market. Chindex has encountered limitations on its ability to unlock projected value without substantial capital expenditures and funding currently unavailable to the Company.”
Roberta Lipson, a founder and the CEO of Chindex, who will remain as CEO and roll over substantially all of her equity in the transaction, said, “Bringing in the expertise of TPG and Fosun will be a win for our existing business, our expansion plans and the patients and communities we serve and hope to serve. Over the last 15 years, Chindex has built its United Family Healthcare network into a premium brand, but we believe that new partners and committed financing are needed to achieve the next phases of these plans, including new facilities in our current service locations as well as significant geographic expansion. Together with Fosun and TPG, we will be able to continue developing our capabilities to offer comprehensive healthcare services of the highest quality across the entire life cycle of our patients.”
Under the terms of the agreement, there is a so-called “go-shop” period, during which the Company and its advisors are permitted to actively solicit and consider alternative proposals from third parties through April 3, 2014, plus a potential 15-day extension, and the Company management and Fosun are permitted to enter discussions with parties that make alternative proposals during that period.
Chindex does not anticipate disclosing developments with respect to this process unless and until the Transaction Committee and the Company’s Board of Directors make a decision regarding a potential superior proposal or the expiration of the go-shop period. There can be no assurances that this process will result in a superior proposal. In addition, the Buyer Consortium may, subject to the terms of the merger agreement, respond to such proposals.
Completion of the transaction is subject to certain conditions, including, among others, the approval by Chindex stockholders, the approval by a majority of Chindex disinterested stockholders, the approval by stockholders of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., the approval under Chinese antitrust laws, and other customary closing conditions. A special meeting of the Company’s stockholders will be held following the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) and subsequent mailing of the proxy statement to stockholders.
The transaction will be financed through cash contributed by TPG, a combination of cash and equity contributed by Fosun and equity contributed by Ms. Roberta Lipson and other management members. The transaction is not subject to a financing condition. Assuming the satisfaction of conditions, the Company expects the transaction to close in the second half of the 2014 calendar year.
Morgan Stanley & Co. LLC is serving as financial advisor and Hughes Hubbard & Reed LLP is serving as lead legal advisor to the Transaction Committee of the Board of Directors of Chindex in connection with the transaction. Goldman, Sachs & Co. is serving as financial advisor, Cleary Gottlieb Steen & Hamilton LLP is serving as lead legal advisor, and Fangda Partners is serving as PRC counsel to TPG. Baker & McKenzie LLP is serving as Fosun’s legal advisor. Skadden, Arps, Slate, Meagher & Flom LLP is serving as lead legal advisor of Ms. Lipson and other senior management.
About Chindex
Chindex is an American health care company providing health care services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics. United Family Healthcare currently operates in Beijing, Shanghai, Tianjin and Guangzhou. The Company also provides medical capital equipment and products through Chindex Medical Ltd., a joint venture company with manufacturing and distribution businesses serving both domestic China and export markets. With more than thirty years of experience, the Company’s strategy is to continue its growth as a leading integrated health care provider in the Greater China region. Further Company information may be found at the Company’s website at http://www.chindex.com.
About TPG
TPG is a leading global private investment firm founded in 1992 with $55.7 billion of assets under management and offices in San Francisco, Fort Worth, Austin, Beijing, Chongqing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, Sao Paulo, Shanghai, Singapore and Tokyo. TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings. The firm’s investments span a variety of industries including financial services, travel and entertainment, technology, energy, industrials, retail, consumer, real estate, media and communications, and healthcare. TPG’s past and present investments in China include China Grand Auto, China International Capital Corporation, Daphne, HCP Holdings, Lenovo, Li Ning, Phoenix Satellite Television, Shenzhen Development Bank (currently Ping An Bank), UniTrust, Wumart and Xinyuan Real Estate. For more information, please visit www.tpg.com.
About Fosun Industrial
Fosun Industrial, a wholly-owned subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd, was established in 2004 and registered in Hong Kong. Mr. CHEN Qiyu is the Chairman of the company. Fosun Industrial is principally engaged in foreign investment, the sales and consultation service of Chinese and Western medicine, diagnostic reagent and pharmaceutical equipment and related import and export business.
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”) holds 100% equity interest in Fosun Industrial. Fosun Pharma (stock code: 600196-SH ,02196-HK) is a leading healthcare company in China established in 1994 and listed on the Shanghai Stock Exchange and main board of The Stock Exchange of Hong Kong in August 1998 and October 2012, respectively. It is engaged in various businesses including pharmaceutical manufacturing, distribution and retail, healthcare services and diagnostic products and medical devices. Please visit www.fosunpharma.com for further information.

 

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