Shanghai Fosun Pharmaceutical Group Co. (600196) teamed up with private-equity firm TPG Capital to acquire Chindex International Inc. (CHDX:US), in a deal valuing the New York-listed operator of hospitals in China at $369 million.
The buyers are offering $19.50 a share for the outstanding stock, a 14 percent premium to its closing price on Feb. 14, Chindex said in a statement today. Fosun Pharma, a maker of drugs and traditional Chinese medicine, will own 48.65 percent and TPG will own 48.14 percent after the deal, the drugmaker said in a release to the Shanghai Stock Exchange.
The deal will boost Chindex’s working capital and enhance its scale and profitability amid an expansion of its medical-services network, Fosun Pharma said. China has been easing controls on foreign investments and participation in the country’s hospitals in an effort to boost health-care standards for an aging population.
“Chindex has encountered limitations on its ability to unlock projected value without substantial capital expenditures and funding currently unavailable to the company,” Chairman Kenneth Nilsson said in the statement.
Chindex, founded by Americans Roberta Lipson and Elyse Beth Silverberg who moved to China in the late 1970s, runs the United Family Healthcare chain of high-end hospitals and clinics in cities including Beijing, Shanghai and Guangzhou, according to the Bethesda, Maryland-based company’s website.
Investors from Hong Kong, Macau and Taiwan can set up wholly owned hospitals in Chinese cities above the prefecture level, while foreign investors can set up wholly owned hospitals in special areas such as Shanghai’s free-trade zone, the National Health and Family Planning Commission announced last month.
The takeover agreement allows for a “go-shop” period where Chindex is permitted to solicit and consider alternative third-party proposals until April 3, with a potential 15-day extension, the hospital operator said.
Fosun Pharma will spend as much as $193.7 million to privatize Chindex, and another $45 million to acquire a further 30 percent of Chindex Medical Ltd., a unit that distributes medical equipment and instruments, to give it full ownership that business, the Shanghai-based drugmaker said.
Lipson will remain as chief executive officer and roll over “substantially all of her equity” in the transaction, Chindex said.
Chindex rose 3 percent to $17.15 in Nasdaq trading on Feb. 14. The stock has jumped 59 percent over the past year. Fosun Pharma’s shares were suspended in Hong Kong and Shanghai today. The stock has gained 79 percent in Shanghai in the last 12 months, while more than doubling in Hong Kong.
U.S. markets are closed today for Presidents’ Day.
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