Sinovac Biotech in play as consortium makes counteroffer to management-led buyout

Beijing-based Sinovac Biotech ($SVA) is in play, with the board getting an unsolicited offer of $7 a share from a consortium of Chinese drug and investment firms, placing it 13% above a management-led offer of $6.18 a share days before for a firm that has a small, but growing, vaccine business in China.

Sinovac CEO Weidong Yin

The latest offer values Sinovac around $390 million, compared to full-year sales of $63.10 million in 2014, according to its annual report, with the latest results available for the third quarter of last year showing the firm on a slightly higher revenue track

The Feb. 4 offer from Shanghai-based PKU V-Ming Investment Holdings;  Shandong Sinobioway Biomedicine; Shenzhen-based Qianhai Development Management; Beijing Sinobioway Group; China-based Heng Feng Investments; and Hong Kong-based Fuerde Global Investment, likely came as a surprise to management.

The consortium however, said it wants to work with existing management and related investors who earlier this week made the $6.18 a share offer led by Weidong Yin, chairman, president and chief executive officer, and SAIF Partners to buy all outstanding common shares not held by them.

"We are confident that our proposal is highly attractive to Sinovac and its shareholders. We encourage the Special Committee to take into consideration our flexibility in the proposed structure and willingness to work with Mr. Yin and SAIF as an alternative to deliver superior and immediate value to Sinovac's shareholders," the consortium said in a press release.

In response to the first offer, the company appointed a special board committee to review it made up of three independent directors. Sinovac Biotech said in a subsequent press release that the same committee would review the new offer.

The counteroffer highlights continued active investor demand for China-focused healthcare firms, following on the heels of a $158.4 million initial public offering for Beijing-based oncology biotech BeiGene ($BGNE) this week that caught solid demand in a downbeat global market.

For Sinovac, which just received a GMP certificate for its EV71 vaccine from the China FDA, it is following other China firms leaving the U.S. markets for what many investors expect will be an eventual relisting in Hong Kong.

At least one of the firms in the consortium has also been active in the U.S. this year. Sinobioway Group is slated to invest a total of $70 million in San Diego-Beijing biotech BioAtla in payments and equity this year related to programs selected for development in collaboration deal to develop CAB antibody therapeutics.

BioAtla had earlier signed a potential $1 billion deal with Pfizer ($PFE) in December covering CAB.

- here's the release