TPG and Fosun bid higher for Chindex

TPG Capital and Shanghai Fosun Pharmaceutical Group, a subsidiary of Chinese corporate giant Fosun International, have increased their offer to acquire healthcare provider Chindex International from $369 million to $461 million, according to a statement.

The offer price increased from $19.50 per share to $24.00 per share for Chindex after an undisclosed financial bidder offered $23 per share and declined to bid further.

Chindex’s transaction committee and board of directors unanimously approved the amended agreement from TPG and Fosun and called it “more favorable” than the $23 per share offer, according to the statement.

The new offer price represents an 86 percent premium over Chindex’s closing share price since the committee was formed to negotiate the transaction on 26 December 2012. Chindex’s share were trading at prices between $23.51 and $23.75 Monday.

Chindex is an US healthcare company which provides services in China through United Family Healthcare, a network of private hospitals and clinics. Fosun Pharma currently owns about 17 percent of Chindex, which it plans to increase by about 30 percent, ultimately holding around 48 percent of equity in the company, according to a statement filed by Hong Kong-listed Fosun with the HKEx in February.

If TPG’s investment is approved, the firms will hold equal stakes and TPG and Fosun directors will each take three seats on the board, with management making up the remaining three seats, a source close to the matter previously told Private Equity International.

The transaction will be funded by cash from TPG and a combination of cash and equity from Fosun, and is expected to close in the second half of the year. The new agreement will also no longer require the approval of Fosun Pharma shareholders. Fosun’s equity will be rolled over to Fosun Pharma which will seek approval of Fosun’s shareholders for the cash contribution. If the shareholders do not approve the cash contribution, TPG will fund the transaction.

Goldman Sachs is serving as financial advisor and Cleary Gottlieb Steen & Hamilton LLP is providing legal counsel to TPG. Baker & McKenzie is serving as Fosun's legal advisor.

The deal is TPG’s second of its kind, having invested in NYSE-listed ShangPharma in May 2013 in a deal worth a reported $173 million. TPG has also owned shares in the now Hong Kong-listed healthcare company NT Pharma since 2008.