China-based Simcere Pharmaceutical Group (SCR) Monday said its board has received a non-binding proposal letter from a consortium led by founder chairman Jinsheng Ren, to acquire all of the outstanding ordinary shares of the firm for $9.56 per American Depositary Share or ADS or $4.78 per ordinary shares in cash. The shares rose about 15 percent in the morning trade.
The buyer Group comprises Jinsheng Ren, New Good Management Ltd., Assure Ahead Investments Ltd., and its affiliates. New Good Management is a British Virgin Islands company controlled by Jinsheng Ren, chairman of the board of directors of Simcere.
Founded in 1995, Simcere specializes in the development, manufacturing, and marketing of branded and proprietary pharmaceuticals in China. The company has strategic partnership and cooperation agreements with OSI Pharmaceuticals, Inc., Bristol-Myers Squibb Co. (BMY), Suzhou NeuPharman Co. Ltd., and Merck & Co., Inc. (MRK).
As per the proposal letter, the Buyer Group will form a transaction vehicle for the purpose of pursuing the proposed deal, which is intended to be financed with a combination of debt and equity capital.
Simcere board has formed a special committee of independent directors consisting of Alan Au and Guoqiang Lin, to consider the proposed transaction. The special committee has appointed Alan Au as its chairman.
The special committee intends to retain advisors, including an independent financial advisor and legal counsel, to assist it in its work, Simcere stated.
However, the special committee has made no decisions related to the company's response to the proposed transaction. Simcere said there can be no assurance that any definitive offer will be made, or any agreement will be executed.
Last week, Simcere Pharmaceutical reported a loss for its fourth quarter primarily attributable to a non-cash impairment charge as a result of a write-down of intangible assets, goodwill and assets held for sale associated with the acquisition of Jiangsu Quanyi in 2009. The company however, witnessed a revenue rise for the period.
SCR is currently trading at $9.10, up $1.14 or 14.32 percent, on a volume of 51 thousand shares on the NYSE.
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