Private Equity News & Analysis

Hony Capital to privatise US-listed pharma company

The Beijing-based firm joins a consortium of investors taking private Chinese pharmaceutical company Simcere in a deal worth close to $500m.

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In yet another privatisation of a US-listed Chinese company, a consortium of investors including private equity firm Hony Capital have agreed to acquire New York Stock Exchange-listed Simcere Pharmaceutical Group, according to a statement from the target company.

The full deal value has been estimated by media reports as $495 million. Hony did not respond to requests for comment. 

The investor group has agreed to pay $4.83 per ordinary share or $9.66 per American depository share, representing a 21.4 percent premium over the company’s closing price of $7.96 per ADS on 8 March 2013 and a premium of 23.1 percent over the company’s 30-day volume-weighted average closing price for the month preceding 11 March 2013. 

Hony Capital II will invest through its affiliate Assure Ahead Investments, joining founder Jinsheng Ren, New Good Management, Right Lane Limited, King View Development International and Fosun Industrial – the rollover shareholder that currently own 77.57 percent of all outstanding shares. 

Pharmaceutical group Simcere is the latest 
US-listed Chinese company targeted by PE

The company’s board of directors has approved the merger on the unanimous recommendation of a special committee made up of independent directors. The transaction is expected to close this year. 

Private equity firms have targeted overseas-listed Chinese businesses with stock prices that have been undervalued due to a wave of accounting scandals involving some of them. Often high premiums are paid to take them private. 

In May, CITIC Capital agreed to buy US-listed AsiaInfo-Linkage alongside its co-founder for $890 million – a 53 percent premium over its 30-day average, Private Equity International reported earlier. 

Similarly, in March, The Carlyle Group led a consortium of investors to acquire 7 Days Group Holdings, a Chinese hotel chain listed on the New York Stock Exchange, agreeing to take the company private for $688 million, according to a Securities and Exchange Commission filing.