Simcere Pharmaceutical Group
) recently announced that its Board has agreed to a buyout
proposal from a conglomerate led by founder Mr. Jinsheng Ren, New
Good Management Limited, Assure Ahead Investments Limited and its
We remind investors that the proposal was initially made in
Mar 2013. In response, Simcere's Board formed a special committee
of independent directors to consider the proposal.
Ren founded Simcere in Mar 1995. The conglomerate currently
has an approximate 77.6% stake in Simcere.
As per the buyout offer, shareholders of Simcere will receive
$4.83 per share or $9.66 per American depositary share (ADS), up
from the original offer of $4.78 per share or $9.56 per ADS. We
note that each ADS represents two ordinary shares of
The offer price represents a 21.4% premium over the closing
price of $7.96 per ADS on Mar 8, 2013. The transaction is
expected to close by 2013 end.
We note that Simcere's decision to go private comes in the
wake of tough business conditions that it has been facing in the
last few months.
Simcere's second-quarter results were disappointing. Simcere
is expected to face challenging market conditions in the
remainder of 2013 as well due to pricing pressure from the
Hence, the increased offer price should come as a relief to
Simcere Pharma currently carries a Zacks Rank #3 (Hold).
However, others stocks which look attractive include
Biogen Idec Inc.
), each with a Zacks Rank #1 (Strong Buy).
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