Quick Take: Cosmetic Treatment Firm Likes the Look of UK Peer

After a Chinese manufacturer of aesthetic medicines expressed interest in buying a British peer, the former’s stock price fell while the latter’s rose.

Shares of the Shenzhen-listed Huadong Medicine Co. Ltd. dropped by as much as 3.3% during the morning session after it confirmed Friday that it had held preliminary talks with British peer Sinclair Pharma PLC about an all-cash purchase.

The stock decline followed a price drop of 3.6% the previous day when the British provider of skin cosmetic treatment products first announced that Huadong Medicine, together with its private parent China Grand Enterprises Inc., had approached it. In contrast, shares of the London-listed Sinclair surged 23% that day.

The confirmation of talks came at a time when intensifying trade frictions between the U.S. and China have seen Chinese stocks enter a bear market.

The “discussions remain at a very early stage,” Sinclair said.

Huadong Medicine also said that “there can be no certainty that an offer will be made.” It hasn’t started any due diligence, nor has the board formally studied or discussed the issue, the Chinese company said.

Huadong should announce a firm decision by no later than 5 p.m. Aug. 2 London time, both the British and the Chinese company said.

As a pharmaceutical manufacturer and aesthetic medicine marketing company, Huadong Medicine said that the potential Sinclair deal would support it in achieving its ambition “to become one of the leading aesthetic companies worldwide.”

Contact reporter Coco Feng (renkefeng@caixin.com)