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| Wuxi PharmaTech CEO Ge Li |
The word that China's top CRO WuXi PharmaTech ($WX) would delist from the U.S. in a management-led $3.3 billion buyout opens up more paths to dealmaking that may not reach the public as quickly.
The deal, pending a nod from shareholders, sees an all-cash transaction at $46 a share and a new parent company 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 even after announcing the buyout offer in April, the company continued to make nearly weekly announcements ranging from alliances in genomics to plans for China's biggest biologics plant to investment in a healthcare funds--and its deals were global.
However, as a private firm, it has more leeway in informing the market on strategic moves and that may be one reason for the management offer, according to a Shanghai-based industry analyst.
"It's an ambitious company that would like less noise about smaller targets and plans," the analyst, who declined to be named, told FiercePharmaAsia. "Quarterly and other disclosure rules that come with a U.S. listing make that nearly impossible. The company also wants to have a sustained period of investment that when fully underway would make a return the capital markets either in the U.S., China or possibly Honk Kong potentially highly lucrative."
Other China-focused firms have followed a similar path.
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.
"It's more than possible WuXi will find a way back onto the market at a significant premium to the buyout price in a few years," the industry source said. "But nothing is guaranteed for a company like this covering CRO work to venture funding."
- here's the WuXi earnings release
- and the merger release