China Traditional Medicine Holdings (HKG: 0570; China TCM) has announced that its controlling shareholder, the state-owned Sinopharm Group Co., Ltd (HKG: 1099), intends to take the company private. The proposed deal values China TCM at a price of HKD 4.6 per share, representing a 34% premium over the recent closing price. The transaction, which involves 3.4 billion China TCM shares, will require a total cash outlay of approximately HKD 15.65 billion (USD 2.0 billion).
This move to privatize China TCM comes amidst existing close business ties between Sinopharm and its subsidiary. As previously disclosed, these relationships encompass several areas, including the sale of certain drugs to Sinopharm, the procurement of traditional Chinese medicine (TCM) and chemical drug raw materials from Sinopharm, the provision of financial services by a Sinopharm member company, and the offering of commercial factoring services by another Sinopharm affiliate.
The privatization deal underscores Sinopharm’s strategic commitment to China TCM and reflects the parent company’s intention to streamline operations and enhance shareholder value through a more centralized control over its traditional Chinese medicine business.- Flcube.com
