Caixin
Aug 15, 2017 07:17 PM
M&A

Chinese Drugmakers Pursue U.S. Peer Arbor

A Hong Kong unit of Shanghai Fosun Pharmaceutical (Group) Co. Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd. have submitted separate nonbinding bids for U.S.-based Arbor Pharmaceuticals LLC. Above, Fosun Pharmaceutical hosts a booth at a medical exhibition in Shanghai in June 2008. Photo: Visual China
A Hong Kong unit of Shanghai Fosun Pharmaceutical (Group) Co. Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd. have submitted separate nonbinding bids for U.S.-based Arbor Pharmaceuticals LLC. Above, Fosun Pharmaceutical hosts a booth at a medical exhibition in Shanghai in June 2008. Photo: Visual China

Two Chinese drugmakers are separately bidding for a stake in U.S. peer Arbor Pharmaceuticals LLC against the backdrop of China’s tighter scrutiny of outbound investment.

Nonbinding bids were submitted July 19 by a Hong Kong unit of Shanghai Fosun Pharmaceutical (Group) Co. Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd., the companies said in separate filings Monday with the Shanghai Stock Exchange.

Neither company disclosed whether a majority stake or a minority stake might be targeted, citing confidentiality requirements. Nor did either announce any financial details or their bid amounts.

Arbor, based in Atlanta in the state of Georgia, is a 7-year-old maker of specialty drugs for treating cardiovascular and neurological diseases.

Fosun submitted its bid despite regulatory obstacles at home and abroad that have complicated the company’s recent efforts to expand overseas. Authorities in India, for example, have yet to approve its proposed, $1.3 billion purchase of Indian Gland Pharma Ltd. The deal was initially set to close in January.

Chinese regulators have raised hurdles for Fosun and other major Chinese companies with overseas investment ambitions, including HNA Group, Anbang Insurance Group Co. and Wanda Group. For example, domestic lenders were recently asked by the China Banking Regulatory Commission to assess credit-risk exposure to companies active in overseas acquisitions, including Fosun.

Fosun Pharmaceutical said a deal with Arbor would enhance its research and development capabilities. Shanghai Pharmaceuticals said it was looking for high-performance assets. Each company cited a strategic interest in expanding overseas.

Chinese pharmaceutical companies have since 2016 announced 13 overseas mergers and acquisitions worth a combined $4.5 billion, according to health care industry analyst VCBeat Research. Leading the pack in terms of spending is Fosun, which has pursued three deals worth more than $1.4 billion combined.

State-backed Shanghai Pharmaceuticals has also been active overseas. In December, a company subsidiary acquired a 60% stake in Australian vitamin producer Vitaco Holdings Ltd. for 938 million yuan ($140.7 million). And in February, another subsidiary said it will invest $20 million in the U.S. investment fund A.M. Pappas Life Science Ventures.

On Tuesday, Fosun Pharmaceutical’s Shanghai-listed shares rose 0.1% to 29.6 yuan, while Shanghai Pharmaceuticals shares dropped 3.12% to 25.13 yuan.

Contact reporter Coco Feng (renkefeng@caixin.com)

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