China's iKang Healthcare ($KANG) wants to go private in a management-led $1.1 billion offer that would see it delist from the U.S., making it among a handful of healthcare-related companies from the Middle Kingdom to pursue the strategy this year.
|iKang CEO Ligang Zhang|
The company has been on the Nasdaq just shy of two years with a group led by founder, chairman and CEO Ligang Zhang ready to take the company private at $17.80 per American Depositary Share (ADS), about 10% above the price at the time of the offer on Aug. 31 and a nearly one-third more than the initial public offering price of $14 per ADS.
UBS analyst Shaojing Tong, in a Sept. 1 note to clients, said he expects the offer to be raised and maintains a buy rating and price target of $21.93 per ADS, "but we acknowledge that with the proposal to go private the stock price is less likely to be driven by company fundamentals."
Tong said shareholder approval of 75% of voting share is needed for the deal to proceed with the buyer group holding 34.5% of the total voting rights now. But he said there may be support to cash out as a number of other companies have recently made such moves.
Earlier this month, China's top CRO WuXi PharmaTech ($WX) said would delist from the U.S. in a management-led $3.3 billion buyout, pending a nod from shareholders in an all-cash transaction at $46 a share. The new company would be led by CEO Ge Li and China-focused fund Ally Bridge Group as well as Boyu Capital, Temasek Life Sciences, Hillhouse Capital, Ping An Insurance and other company executives.
But another industry deal by a Chinese healthcare-related company to delist from the U.S. seems stalled.
In June, the board of China's Mindray Medical International ($MR) formed a special committee of three independent directors to consider the previously announced non-binding senior management buyout proposal.
But in July, news that it would acquire the remaining stake of orthopedics player Wuhan Dragonbio Surgical Implant appeared to signal the take-private offer is now off the table. The company has not updated the status since Aug. 10 results.
However, such back-and-forth in listing is not new.
In 2012, ShangPharma and 3SBio moved to delist from the U.S. and go private. However, in June, 3SBio raised $710 million in an initial public offering on the Hong Kong Stock Exchange after it left the Nasdaq in 2013 and went private under a $370 million deal done by a consortium led by CEO Jing Lou and investment firm Citic Private Equity.
It subsequently made two big moves on its return flush with cash.
In late July it bought small molecule maker Zhejiang Wansheng Pharma for RMB528 million ($85 million), following a June move to acquire the ex-China global rights to Apexigen's anti-TNF monoclonal antibody technology. 3SBio previously acquired the China rights from Apexigen in 2006.
- here's the release from iKang