UPDATE 2-China's Simcere Pharma receives go-private offer from chairman

Mon Mar 11, 2013 1:06pm EDT

* Buyout offer of $9.56/ADS values co at about $500 mln

* Offer represents premium of 19 pct

* Simcere shares rise 14 pct

March 11 (Reuters) - Simcere Pharmaceutical Group received a buyout offer from a consortium led by founder-chairman Jinsheng Ren, the latest in a series of China-based companies going private to avoid regulatory scrutiny in the United States.

The buyers' consortium includes non-public shareholders New Good Management Ltd - a company controlled by Simcere Chairman Ren - and Assure Ahead Investments, a company owned by Hony Capital, a Chinese private equity firm.

New Good Management owned about 36 percent of Simcere's outstanding shares and Assure Ahead Investments owned about 17 percent as of April 18, 2012, according to a regulatory filing. Ren held about 38 percent of Simcere's shares. ()

The offer of $9.56 per American Depositary Share (ADS) represents a premium of 19 percent to Simcere's Friday close of $8.06 and values the company at about $500 million.

The company's stock, which has fallen about 9 percent over the last year, was trading at $9.12 on Monday afternoon on the New York Stock Exchange.

The potential buyers intend to finance the deal with a combination of debt and equity capital.

Simcere, which makes drugs for cancer, and heart and brain diseases, will join a growing list of Chinese companies going private if the deal is completed.

Chinese companies are leaving U.S. stock markets as government investigations of suspect financial reports and battered share prices have lowered their chances of raising new money in the United States.

"We're seeing a lot of this kind of deal in China and usually they have pretty solid financial backing because there's a lot of private equity firms or venture capital firms chasing this kind of deal," Oppenheimer & Co analyst Ingrid Yin said.

Publicly listed companies are financially transparent and such public-private deals are normally completed within a year, she added.

Twenty-seven China-based companies with U.S. listings announced plans to go private through buyouts in 2012, up from 16 in 2011 and just six in 2010, according to investment bank Roth Capital Partners.

Chinese biotechnology firm 3SBio agreed in February to be taken private for about $340 million by a group led by its chief executive and a Chinese private equity firm..

Simcere, founded in 1995, said on Monday it has formed a special committee of independent directors to consider the proposal.

The buyer group retained Cleary Gottlieb Steen & Hamilton LLP as U.S. legal counsel in connection with the transaction.

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