Shanghai Henlius Biotech, listed in Hong Kong, saw its shares surge 18.9% to a two-year high following an announcement that Fosun Pharma has offered HK$5.4 billion (US$690 million) to privatize the company. Fosun Pharma, the pharmaceutical division of the Chinese conglomerate Fosun International, proposed paying HK$24.60 per H share and 22.44 yuan per unlisted share to acquire all shares it does not currently own. This offer represents a 36.7% premium over Monday’s closing price of HK$18, with total aggregate prices amounting to HK$3.23 billion (US$410 million) and 1.99 billion yuan (US$270 million).
China International Capital Corp (CICC) and Fosun International Capital are acting as joint financial advisers for the transaction. In a joint filing, Henlius and Fosun indicated that the company’s listing status no longer provides significant capital access and incurs additional costs. Since its 2019 listing, Henlius has not raised funds through equity financing and faces limitations in capital-raising due to its low price range and sluggish trading volume. The filing also highlighted that the company’s share performance has been unsatisfactory, influenced by global macroeconomic challenges, changes in the healthcare industry, and the momentum in the Hong Kong stock market.
Henlius specializes in developing biologic medicines, focusing on oncology, autoimmune diseases, and eye disorders. In 2023, the company reported a 67.8% increase in revenue to 5.34 billion yuan and achieved net earnings of 546 million yuan, marking its first full-year profit. Despite this, its stock had declined by 42% in 2022 and 52% in 2021 before recovering 8.6% last year. The current share price remains 55% below the IPO price of HK$49.60 and 66% lower than the record high in 2020.
Fosun Pharma stated that the depressed share price does not reflect Henlius’s core value as a global biopharmaceutical company with a diversified product pipeline, which could harm its business focus and employee morale. The privatization is intended to allow Henlius to concentrate on critical business and operational issues without the distractions of share price volatility.
This move is part of a broader trend of companies exiting the Hong Kong stock market through privatization or voluntary delisting due to undervaluation. As of mid-March, Hong Kong-listed firms were involved in US$4 billion worth of take-private deals in 2024, compared to US$1.2 billion for all of last year, according to Dealogic. The Hang Seng Index trades at about 9.51 times forward earnings on average, whereas the CSI 300 Index and S&P 500 members trade at 13.64 times and 23.88 times, respectively.
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