3SBio Inc., a Chinese biotechnology company, says a consortium has raised its offer to take the Shenyang-based company private for about US$370 million.
The consortium includes 3SBio’s CEO Dr. Jing Lou and CPEChina Fund, a China-focused private equity fund associated with CITIC Private Equity Funds Management Co.
The revised offer aims to take 3SBio Inc. private for US$16.70 per American Depositary Share (ADS) from US$15.40, when the company previously announced the take-private plan on February 8 this year.
The revised offering price amounts to an 8.4% increase to its original proposal. It represents a 9.9% premium to 3SBio Inc.’s closing price on April 19 before the company’s announcement of the revised offer, and 44.1% premium to the closing price on September 11, 2012, before the announcement of the original proposal.
The buyers say they intend to finance the increase in the buyout deal through a combination of additional convertible note financing from CITIC Private Equity and additional cash in the company.
Numerous high-profile accounting scandals several years ago have crushed international investors’ confidence in Chinese companies traded overseas. Low valuations have spurred an increasing number of Chinese companies to "go private" in the hope of listing domestically or in Hong Kong to achieve better valuations.
Twenty-five Chinese companies have completed going private deals from U.S. exchanges between 2010 to 2012, including Shanda Interactive Entertainment, China Fire & Security, China Mass Media, China TransInfo, Harbin Electric, Tongjitang Chinese Medicines, according to a recent academic paper.
Fourteen companies’ go-private deals are currently pending, including Focus Media Holding, 7 Days Group Holdings, AsiaInfo-Linkage, and China Advanced Construction Materials.