Shanghai Fosun Pharmaceutical (Fosun Pharma) and US private equity firm TPG have made an offer to take Nasdaq-listed healthcare company Chindex private in a $369 million deal.
The move offers TPG the chance to gain exposure to China's growing healthcare sector, an area that the government has been loosening restrictions on.
It also will enable the Chinese group’s management to partner two deep-pocketed players in its expansion drive.
Fosun Pharma already holds a 17.4% stake in Chindex and, after the deal, this will rise to 48.6%. TPG's stake will be 48.1% and the management's stake, including that of chief executive Roberta Lipson, will be 3.2%.
"Chindex has an established brand but in order to leverage on that they need capital to expand," said Jon Christianson, a partner at Skadden, Arps, Slate, Meagher & Flom, which advised Lipson and Chindex's senior management on the deal.
"It’s hard when you have to rely on capital markets to raise money, and partnering Fosun and TPG, which have the ability to bring financing to the table, makes a lot of sense," he added.
Chindex, which posted a modest net profit after tax of $4 million for the year ended December 2012, was founded in 1981 by Lipson and executive vice-president Elyse Beth Silverberg.
Both women moved to China in the late 1970s, following re-establishment of diplomatic relations between the US and China, and started a hospital in Beijing, catering mainly to expat women.
The consortium, which includes TPG, Fosun Pharma and Lipson, is making an offer of $19.50 per share, a premium of about 14% over the current share price. Under the terms of the agreement, there is a “go-shop" period during which Chindex and its advisors are allowed to solicit alternative proposals from third parties.
The deal is subject to approval by Chindex shareholders and the approval by a majority of Chindex's minority shareholders. It is also subject to the approval by Shanghai Fosun Pharmaceutical shareholders.
The offer is a continuation of the trend of US-listed Chinese companies being taken private.
In recent years, the share prices of many US-listed Chinese companies have struggled, making them cheap targets to be taken private. However, in the past year or so, many Chinese companies have seen their share prices rebound, which is likely to slow further deal-making.
Morgan Stanley advised Chindex's board of directors and Goldman Sachs advised TPG. The deal is expected to close in the second half of 2014.
(This story has been corrected to state that Chindex needs approval from a majority of its minority shareholders for the deal to go through).