In interesting news for Hong Kong-listed stocks, state-owned Sinopharm Group Co. (HK:1099) is seeking to fully buy the remaining roughly 68% stake in China Traditional Chinese Medicine Holdings (China-TCM) (HK:0570) in a HK$23.2 billion deal. Sinopharm, the majority owner of China-TCM, has offered HK$4.6 per share in cash to acquire the remaining shares.
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Details of the Deal
Sinopharm is a distributor of pharmaceutical and healthcare products and a value-added supply chain service provider in the People’s Republic of China. Meanwhile, China-TCM is a relatively smaller player with a focus on the Chinese healthcare sector. Following the news, 1099 shares gained 3.9% while 0570 shares zoomed up 24.2%.
The offer price represents a 34% premium to China-TCM’s closing price of HK$3.43 on February 8. China-TCM stock has been inactive since then because of the Lunar New Year holidays and a trading halt earlier this week.
The acquisition, if successful, will be one of the largest such deals for Hong Kong-listed companies. Sinopharm will not re-evaluate the offer price and is considering this as the last and final offer to buy the drug maker. Sinopharm had once attempted to take China-TCM private earlier but gave up the idea in 2021.
Is Sinopharm a Buy, Sell, or Hold?
With just one Buy rating received during the last three months, 1099 stock has a Moderate Buy consensus rating on TipRanks. The Sinopharm Group Co. share price target of HK$29.01 implies 33.7% upside potential from current levels.
