(Corrects name of firm in 1st para of Feb. 8 story to CITIC
Private Equity from CITIC Capital and removes words "CITIC-led"
from headline. Also, an incorrect referrence to CITIC Capital
appeared in an earlier version of the story)
Feb 8 Chinese biotechnology firm 3SBio
agreed to be taken private for about $340 million by a group led
by its chief executive Jing Lou and Chinese private equity firm
CITIC Private Equity, the latest in a growing list of Chinese
companies going private to escape U.S. regulatory scrutiny.
Twenty-seven China-based companies with U.S. listings
announced plans to go private through buy-outs in 2012, up from
16 in 2011 and just six in 2010, according to investment bank
Roth Capital Partners.
For drug makers such as 3SBio, which has a prominent
presence in the oncology space, pricing pressures have
compounded the problem. China cut the maximum retail price on 95
cancer, immunology and blood-related drugs by about 17 percent,
effective Oct. 8.
Among the more recent Chinese drug makers that went private
was Shanghai-based ShangPharma, which last December agreed to be
bought for about $175 million.
The CITIC consortium's offer price of $15.40 for each 3SBio
American Depositary Share (ADS) is at a premium of about 12
percent to the ADS's Thursday close of $13.79.
The offer is a premium of 33 percent to its trading levels,
immediately prior to when the group first bid $15 per ADS for
the stock in September.
3SBio's shares have fallen nearly 19 percent since then.
Net income in the July-September quarter, the latest for
which results are available, fell 35 percent from a year earlier
as CEO Lou warned that retail drug price ceilings would put
pressure on prices in the short term.
Collectively, the CITIC consortium owns about 18 percent of
the company's total issued and outstanding share capital, 3SBio
said in a statement.
BofA Merrill Lynch is the financial adviser to the
consortium, which plans to fund the deal with a combination of
debt, equity and cash in 3SBio. Under the proposal, CITIC has
provided "equity commitment", 3SBio said.
3SBio's ADSs shares were trading at $14.67 on Friday on the
Nasdaq. The stock rose to a high of $15.00 earlier in the
(Reporting by Zeba Siddiqui and Esha Dey in Bangalore; Editing
by Roshni Menon, Sreejiraj Eluvangal)