Beijing-based Genetron Holdings Ltd (NASDAQ: GTH) has officially entered into a privatization and merger agreement with a consortium comprising CICC, Wealth Strategy Holding Limited, Wuxi Guolian Development, CCB Trust (Beijing) Investment Fund Management, among others, as reported by Xinhua News Agency. The consortium will acquire Genetron’s American Depository Shares (ADSs) at a price of $1.36 per share.
Regulatory Challenges Impacting Chinese Stocks
Chinese equities have faced heightened scrutiny from regulatory bodies in the United States since 2019. The Holding Foreign Companies Accountable Act, enacted by Congress in 2020, aimed at increasing the regulatory burden on Chinese stocks, particularly concerning information disclosures, securities trading, and listing requirements. In June 2020, then-President Donald Trump signed a presidential memorandum to safeguard U.S. investors from risks associated with investing in Chinese companies. Furthermore, the Accelerating HFCAA was enacted into law last year, intensifying these regulatory challenges.
Historical Context of Genetron’s Buy-Out Proposal
Genetron initially received a buy-out proposal from the company’s CEO, co-founder, and chairman, Wang Sizhen, in August 2022. This offer was to acquire all outstanding ordinary shares at $0.272 each, equivalently priced at $1.36 per ADS.
Genetron made its Nasdaq debut in June 2020, successfully raising $256 million. As China’s sole precision medicine enterprise participating in the country’s major cancer early-screening program, Genetron was also involved in the Major Special Project for the 13th Five Year Plan, spearheaded by the Ministry of Science and Technology.-Fineline Info & Tech
