Caixin
Mar 27, 2018 05:26 PM
M&A

Alibaba-Led Consortium Privatizes iKang Clinic Network

Clinic operator iKang Healthcare Group Inc. makes its debut on the Nasdaq stock market on April 9, 2014. Photo: IC
Clinic operator iKang Healthcare Group Inc. makes its debut on the Nasdaq stock market on April 9, 2014. Photo: IC

A consortium that includes Alibaba Group Holding Ltd. has finally secured a deal to acquire Nasdaq-listed clinic operator iKang Healthcare Group Inc., nearly two years after a slew of competing offers bogged down privatization efforts.

IKang said Monday that it has entered a definitive agreement to be privatized by the group, of which Yunfeng Capital is a member. Yunfeng Capital is backed by Alibaba founder and Executive Chairman Jack Ma.

The consortium offered $20.60 for each of iKang’s American depositary shares (ADSs), which represents a 15% premium over the closing price of $17.92 per ADS on March 9, the last trading day before the company received the privatization proposal.

The news boosted iKang shares by 7.7% on Monday.

The Alibaba-led consortium resumed its bid to privatize iKang in early March, nearly two years after its drive to do so had ground to a halt. It comes as Alibaba has been expanding its health care interests beyond its online pharmacy and doctor network.

IKang operates one of China’s largest private clinic networks, offering medical checkups at 110 of its own medical centers in 33 cities as of Monday. Its total coverage extends to more than 200 cities through contracts with third-party facilities.

The latest offer matched a proposal Yunfeng made in June 2016 to acquire iKang for $20 to $25 per ADS in an all-cash transaction, which was interrupted by rival bidders. But iKang “has been continuing to negotiate with Yunfeng,” according to a March 12 iKang statement.

Efforts to privatize iKang began in 2015, a year after the company listed on the Nasdaq Stock Market. A consortium led by iKang founder and CEO Zhang Ligang pledged $17.80 per ADS to privatize the firm.

But the plan was interrupted by rival Meinian Onehealth Healthcare Holdings Co. Ltd., which, together with several investment firms made a competing offer of $22 per ADS, raising the price to $23.50 and eventually to $25.

IKang’s Zhang considered Meinian’s proposal an attempt at a hostile acquisition. Yunfeng then joined the battle as a “white knight,” making an offer in June 2016, a person close to the deal told Caixin at the time.

Both Zhang and the Meinian consortium withdrew their bids days after the Yunfeng offer, leaving it as the only suitor. However, China Life Insurance Co. unexpectedly emerged as a fourth bidder, offering a price that was “slightly higher than $20 per ADS,” a source close to China Life told Caixin at the time.

Progress on the deal the stalled, only to be resumed by Alibaba in March this year. The deal is expected to close during the third quarter of 2018, iKang said.

Contact reporter Coco Feng (renkefeng@caixin.com)

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code
GALLERY