Healthcare buyouts are popular globally. But in China the reasons for buyouts differ. Rather than sector consolidation, Chinese deals hinge on capturing higher valuations in mainland markets. China’s Covid-19 vaccine maker Sinopharm has joined the trend.
The state-owned pharma group reportedly wants to take China Traditional Chinese Medicine private in a consortium. The parent company plans to offer at least HK$5.10 (US$0.66) per share for China TCM. That would value the alternative medicine maker at about $3.3bn, a 28 per cent premium to its previous closing price.
The timing is right. Sinopharm stands to reap a large windfall from sales of its Covid-19 vaccines and is positioned well for dealmaking. The pandemic has attracted high interest in alternative methods to treat and prevent Covid-19 symptoms. Shares of both Sinopharm and China TCM rose on Wednesday, the latter up 7 per cent.