An investor in China Biologic Products Holdings Inc. has criticized the biopharmaceutical company for rejecting a $3.9 billion takeover bid, saying it should consider all options to maximize shareholder value and unwind a private placement that created a controlling group of insiders.
York Capital Management said in a letter to China Biologic’s board that several other holders, including Comgest Global Investors and Kite Lake Capital, share its concerns about the company rejecting the $118-per-share proposal.
“There was no sign of any serious engagement with the bidding consortium,” Richard Swanson, York Capital’s general counsel, wrote in the letter dated Sept. 26 that was obtained by Bloomberg. “No effort was made to solicit a higher bid from the consortium or from other bidders, despite media reports of multiple interested parties.”
U.S. and China-based representatives for China Biologic didn’t respond to requests for comment.
China Biologic received the all-cash proposal in August from a consortium led by the company’s former chairman David Gao and several investment firms. The group offered to acquire the shares in the company they didn’t already own at $118 a piece, a 31 percent premium on the closing price on Aug. 16, the day before the offer was made, according to data compiled by Bloomberg.
Four days later, the company’s board rejected the proposal, saying it didn’t reflect the intrinsic value of the company. The board also announced that it would issue 5.85 million shares in a private placement to a consortium that included shareholder PW Medtech and Centurium Capital, a private equity fund run by China Biologic Chairman David Hui Li at $100.90 apiece. The move gave Centurium and its partners a combined stake of about 37 percent in the company, York Capital said in its letter.
“As evidenced by where the shares are trading after the rejection and private share issuance, currently around $80/share, we do not believe that the company’s actions have created any value for minority shareholders,” Swanson said.
Beijing-based China Biologic’s shares fell 1.7 percent to $78.11 at 12:30 p.m. Thursday in New York, valuing the company at $2.6 billion.
The board said the private placement was done to help acquire and develop leading technologies assets, York Capital said, noting that China Biologic has $366 million in cash on its balance sheet.
“There has been no explanation made as to why the company would be in need of additional cash at this particular point in time,” York Capital said.