Sirtex is an Australian headquartered global healthcare business listed on the ASX. Its core product is a clinically proven liver cancer radiation therapy that is supplied in more than 40 countries.
MinterEllison's client, CDH Investments, is a Chinese headquartered international private equity firm that manages approximately $US20 billion in assets. It has recently been described in the Australian press as "the KKR of China".
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 $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 $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 is structured as a scheme of arrangement between Sirtex and its shareholders. The offer is now unanimously recommended by the Sirtex Board (in the absence of a superior proposal). Sirtex shareholders are due to vote on the offer in late August 2018, with implementation scheduled for September 2018.
"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."
"Through sustained effort over six weeks, we were able to help our clients achieve this momentous outcome…it's a testament to the professionalism and commercial approach of CDH Investments and China Grand Pharma and their other advisors."
"Our clients were coming from a very long way back – not only was their competing offer lodged literally days before Sirtex shareholders were due to meet to approve the recommended offer from Varian, our clients had to persuade the Sirtex Board that the overall execution certainty of their competing offer stacked up," Mr Colla said.
The joint offer involves a funding structure comprising equity and debt, together with regulatory approvals including FIRB clearance and U.S. anti-trust clearance.
"Although our clients' offer of A$33.60 per share was superior in its headline price to the $28.00 per share Varian was offering, the Sirtex Board rightly undertook a rigorous assessment of our clients' funding certainty and the likelihood of their conditions being satisfied."
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, and settling the debt and equity funding components. MinterEllison will now work with Sirtex's advisors to prepare the scheme booklet to be sent to Sirtex shareholders ahead of their vote in August 2018 on the recommended joint offer.
This is MinterEllison's first advisory role for CDH Investments and China Grand Pharma. 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. It is listed on the Hong Kong Stock Exchange, with a market capitalisation of approximately A$2.1 billion.
CDH Investments and China Grand Pharma are 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.
The MinterEllison team was led by Alberto Colla (Partner). He was supported by David Inglis (Partner), Bart Oude-Vrielink (Partner), David Moore (Partner), Geoff Carter (Partner), Ben Liu (Partner), Adrian Varrasso (Partner), David Eterovic (Partner), Melissa Lai (Special Counsel), Miranda Noble (Special Counsel), Leigh Schulz (Senior Associate), Geoff Earl (Senior Associate), Kate Koidl (Senior Associate), Andrew Jiang (Lawyer) and Jack Fotheringham (Lawyer).
