Reuters – Chinese drugmaker Shanghai Fosun Pharmaceutical Group Co Ltd and private equity firm TPG Capital agreed to buy China-focused Chindex International Inc in a beefed-up $461 million deal after trumping a rival bid.
The U.S.-listed healthcare firm signed a sweetened merger agreement after the consortium raised its offer to $24 per share from its original $19.50 per share, Chindex said in a statement late on Monday. An unidentified bidder had offered $23 per share in a “superior proposal” earlier this month.
The rival group declined to bid further, Chindex said.
The acquisition will help Fosun Pharmaceutical and TPG increase their access to China’s fast-growing private healthcare market. The government is keen to promote investment in the sector to support overburdened public hospitals and bring prices down through increased competition.
China’s healthcare sector is estimated to hit $1 trillion by 2020, according to McKinsey & Co, but is bogged down by rampant corruption, skills shortages and fragmentation.
Chindex runs the premium-end United Family Healthcare hospital chain in China, with operations in major cities such as Beijing, Shanghai, Tianjin and Guangzhou.
The offer marked a 4.6 percent premium to Chindex’s Friday close of $22.94. The stock rose 3 percent on Monday.
Fosun Pharmaceutical will invest up to $223.6 million to become the largest shareholder in Chindex International and up to $45 million for a 30 percent stake in its medical equipment supplier unit Chindex Medical Ltd, the Chinese drugmaker said in statement to the Shanghai stock exchange on Monday.
Fosun Pharmaceutical’s bid is subject to approval from its shareholders, although the merger will go ahead regardless of the outcome, Chindex said in its statement. The merger is expected to be completed in the second half of 2014.
In February, Fosun Pharmaceutical and TPG made the initial offer of $369 million to take Chindex private. The deal would see Fosun increase its stake to over 48 percent from around 17 percent now. TPG would hold a similar share, while Chindex founder Roberta Lipson would retain a small stake in the firm.
Fosun Pharmaceutical’s Shanghai-listed shares were up 0.3 percent on Tuesday, ahead of the benchmark CSI 300 Index which was down 0.2 percent.
Chindex International shares were up 3 percent to $23.63 at the close of trading on Monday, and have now risen 35.6 percent this year, far outstripping the benchmark S&P 500 Index, which is up 1.3 percent. (Reporting by Adam Jourdan; Editing by Miral Fahmy)Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.