China Biologic Products’ board has reached a verdict for the $3.9 billion take-private offer from a buyer group led by its former CEO, and it’s no deal. Instead, the company chose to raise money by issuing new shares to some current investors.
In an announcement on Friday, the Nasdaq-listed plasma product manufacturer said the board has unanimously rejected the $118-per-share buyout offer presented a few days ago by a consortium led by David Gao, the former chairman and CEO of the company.
The board said the offer “did not reflect the intrinsic value of the company and would abrogate the shareholders’ opportunity to enjoy the long-term return from the company's execution of its business strategy of growing into a leading global biopharmaceutical company.”
In the meantime, CITIC Capital, which first proposed to buy the company for $110 per share in June, has withdrawn its non-binding offer. But CITIC is not leaving the negotiation table empty-handed.
As it rejects Gao’s offer, the company said it is issuing an additional 5.85 million shares to several existing investors, including CITIC, at the price of $100.90 apiece, which was the stock’s closing price on Thursday. The new shares represent 14.9% of the company’s capital post-issuance. China Biologic expects the newly raised $590 million will support business expansion plans and strategic acquisitions, it said in a release.
“Through the additional capital and strategic partnerships gained through this private placement, China Biologic will be very well situated to acquire and develop the leading technologies and assets that will help drive exceptional shareholder value for the long term,” said CEO Bing Li in a statement. “I am confident that we now have the right management team, strategy, and committed investor base to fully realize China Biologic's potential as an industry leader.”
The firm’s stock plummeted to around $85 Friday morning at the news, spitting out almost all its gains after CITIC first announced its offer in June.