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Joint takeover of ASX listed Sirtex Medical Limited

4 mins  26.09.2018 Alberto Colla
MinterEllison advised CDH Investments and China Grand Pharmaceutical and Healthcare Holdings Limited on their last-minute A$1.90 billion joint takeover for ASX listed Sirtex Medical Limited.


Key takeouts


CDH Investments and China Grand Pharma are ideally positioned to grow Sirtex’s existing global business and unlock the potential of its core product in China.

 

The takeover involved complex negotiations to secure a successful outcome that will have a significant impact on the availability of liver cancer radiation therapy in China.

 

The takeover offer involved a complex funding structure comprising equity and debt, together with regulatory approvals including FIRB clearance and U.S. anti-trust clearance.

 

CDH Investments is a Chinese headquartered international private equity firm that manages approximately $US20 billion in assets. China Grand Pharmaceutical and Healthcare Holdings Limited is a Hong-Kong listed pharmaceutical company with a market capitalisation of approximately A$1.97 billion

Sirtex, an Australian headquartered global healthcare business listed on the ASX, supplies a clinically proven liver cancer radiation therapy to more than 40 countries. CDH Investments and China Grand Pharma were attracted to Sirtex because China has one of the highest incidence of liver cancer in the world, meaning that Sirtex's liver cancer radiation therapy can be commercialised in the China market. Liver cancer is a leading cause of death in China, and China alone accounts for over half of the world’s incidences of liver cancer. However, the effectiveness of prevailing treatments is limited, and Chinese patients have fewer treatment options than those in developed countries. CDH Investments and China Grand Pharma are ideally positioned to grow Sirtex’s existing global business and unlock the potential of its core product in China, a market where this product is not currently available.

Background

In early May 2018, CDH Investments submitted a non-binding indicative offer to the Sirtex Board of A$33.60 per share, valuing Sirtex at A$1.90 billion. This was just days before Sirtex shareholders were due to vote on an offer of A$28.00 per share from Varian Medical Systems, Inc – an offer valuing Sirtex at A$1.50 billion and which had been publicly recommended by the Sirtex Board since 30 January 2018, "in the absence of a superior proposal". The Varian offer was largely unconditional, as all regulatory approvals had been received since it was first announced on 30 January 2018.

In response to CDH's last minute offer, the Sirtex Board adjourned its 7 May 2018 shareholder meeting to vote on the Varian offer. That step was taken to give the Sirtex Board time to assess whether the conditions attached to CDH's higher offer were capable of being met (bearing in mind that Varian's offer was now essentially unconditional), and also to assess the certainty of CDH's funding arrangements. At the same time, CDH undertook confirmatory due diligence on Sirtex.

Over an intensive period of six weeks, which included the introduction of Hong Kong listed China Grand Pharmaceutical and Healthcare Holdings Limited (China Grand Pharma) as a joint bidder, the Sirtex Board concluded that it was comfortable walking away from the relative certainty of the $28.00 per share Varian offer to pursue a higher, albeit conditional, offer of A$33.60 per share from CDH Investments and China Grand Pharma. The Sirtex Board announced this momentous development to the ASX on 14 June 2018.

The joint offer from CDH and China Grand Pharma was structured as a scheme of arrangement between Sirtex and its shareholders. The offer was unanimously recommended by the Sirtex Board. Sirtex shareholders overwhelmingly approved the offer at a scheme meeting on 10 September 2018, followed by Court approval of the scheme on 12 September 2018 and implementation on 20 September 2018.

What was the role of the firm?

"MinterEllison is delighted to have advised CDH Investments and China Grand Pharma on their recommended offer to acquire Sirtex," said Alberto Colla, MinterEllison's lead Partner. "Achieving an outcome where the Sirtex Board was prepared to terminate its recommended offer from Varian - which was on the cusp of being approved and implemented - required intensive work with our clients and their other advisors."

MinterEllison's role included negotiating the Scheme Implementation Deed with Sirtex's advisors, undertaking confirmatory legal due diligence on Sirtex, drafting the FIRB application, coordinating foreign regulatory advice, advising on the joint bid acquisition structure, settling the debt and equity funding components, and preparing the scheme booklet that was sent to Sirtex shareholders ahead of their vote in September 2018 on the recommended joint offer.

CDH Investments has invested $US5.1 billion in 72 countries across the globe - 75% of its investments are in consumer products, retailing, services and healthcare sectors. China Grand Pharma is principally engaged in the development, manufacture and sale of pharmaceutical preparations, medical devices, pharmaceutical intermediates, specialised raw materials and healthcare products.

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