Proposed CDH Genetech and China Grand Pharma Acquisition of Sirtex

On 14 June 2018, Sirtex announced the termination of the Varian Scheme and the entering into of a binding scheme implementation deed with CDH Genetech (CDH) and China Grand Pharmaceuticals and Healthcare Holdings Limited (CGP). CDH Genetech is an entity wholly-owned by funds advised by CDH Investments.

Sirtex shareholders will be entitled to A$33.60 in cash for each Sirtex share held if the CDH-CGP Scheme is implemented. Sirtex is permitted to pay a dividend of up to A$0.30 per share (Permitted Dividends) to eligible shareholders prior to completion of the CDH-CGP Scheme. To the extent that Permitted Dividends are paid, the A$33.60 cash consideration will be reduced by the amount of the Permitted Dividends.1

The Scheme Consideration of A$33.60 cash per share represents a 78.4% premium to the undisturbed Sirtex share price on 29 January 2018 (the day prior to the announcement of the Varian Scheme) and implies a fully diluted market capitalisation for Sirtex of approximately A$1.9 billion. The Scheme Consideration represents a 20% premium to the Varian offer price of $28 per Sirtex share.

1 The quantum of any dividends to be paid, which may be equal to or less than A$0.30 per share will be determined by the Sirtex Board prior to the announcement of the full year result for FY18


The CDH-CGP Scheme is subject to the following conditions precedent:

  • the Independent Expert concluding, and continuing to conclude, that the CDH-CGP Scheme is in the best interests of shareholders;
  • confirmation from the Treasurer of the Commonwealth Government (or his delegate) that the Commonwealth of Australia does not object under FATA or its foreign investment policy to the transaction (the FIRB approval condition);
  • approval by the US Federal Trade Commission (the US anti-trust condition);
  • no court or government agency in Australia, the United States, Germany, Italy, Belgium, the United Kingdom or Ireland issuing any temporary restraining order, preliminary or permanent injunction or other order restraining, preventing or imposing any legal restraint on the CDH-CGP Scheme (the no restraining actions condition);
  • no Prescribed Occurrences (as defined in the CDH-CGP Scheme Implementation Deed) having occurred by the date of the second Court hearing;
  • approval by Sirtex shareholders and the Court; and
  • there being no insolvency event occurring in relation to the Bidders (the no insolvency event condition).

The Sirtex Board unanimously recommends that Sirtex shareholders vote in favour of the CDH-CGP Scheme and intend to vote shares in their control in favour of the proposed CDH-CGP Scheme, subject to Sirtex not receiving a superior proposal and the independent expert concluding that the CDH-CGP Scheme is in the best interests of Sirtex shareholders.

The Interim Chairman of Sirtex, Dr John Eady said "The Board has undertaken a comprehensive investigation of the merits and risks of the CDH-CGP Proposal, including seeking specialist advice in relation to specific regulatory, legal, funding and other risks. Based on the materially higher offer price and our evaluation of the associated risks, the Board of Sirtex has formed the unanimous view that the CDH-CGP Proposal is a superior proposal and is in the best interests of shareholders."

The Chief Executive Officer of Sirtex, Andrew McLean commented "The CDH-CGP Scheme represents an exciting opportunity to enhance the growth of the Sirtex business, including through entry into new geographies, and we look forward to working with CDH and CGP to implement the transaction. I would also like to thank the Varian team for their professional and constructive approach throughout the period of our engagement."

The Bidders have deposited A$171 million with a major Australian bank and are required to deposit a further A$49 million within the next 10 business days. Sirtex will be entitled to retain A$200 million (plus GST) from this amount in the event that the CDH-CGP Scheme does not proceed due to:

  • failure to satisfy the FIRB condition or the US anti-trust condition;
  • failure to satisfy the no restraining actions condition;
  • failure to satisfy the no insolvency event condition;
  • Sirtex and the Bidders agreeing voluntarily to withdraw the application for approval of the transaction by The Committee for Foreign Investment in the United States (CFIUS) or
  • Sirtex validly terminating the CDH-CGP Scheme Implementation Deed due to a material breach by either of the Bidders of the terms or the representations and warranties provided by them in the CDH-CGP Scheme Implementation Deed.

Preliminary Timetable

Event Expected date
First Court hearing July 2018
Dispatch of Scheme Booklet to Sirtex shareholders July 2018
Scheme Meeting August 2018
Second Court hearing August 2018
Effective Date September 2018
Implementation Date September 2018

Background to the Scheme

On 30 January, 2018 Sirtex announced it had entered into a binding Scheme Implementation Deed with Varian Medical Systems, Inc. (NYSE:VAR) under which it was proposed that Varian acquire 100% of the shares in Sirtex by way of a Scheme of Arrangement for A$28.00 per share.

Subsequently on 4 May 2018 prior to the Varian Scheme Meeting to approve the Varian Scheme, Sirtex received an unsolicited non-binding, indicative and conditional proposal from CDH Investments to acquire 100% of Sirtex for a cash price of A$33.60 per share. On 5 May 2018 Sirtex announced the adjournment of the Varian Scheme Meeting.

On 22 May 2018, Sirtex announced it had received an offer capable of acceptance from CDH Genetech Limited for the acquisition of all of the shares in Sirtex by way of scheme of arrangement, including a draft scheme implementation deed.

On 14 June 2018, Sirtex announced the termination of the Varian Scheme and the entering into of a binding scheme implementation deed with CDH Genetech (CDH) and China Grand Pharmaceuticals and Healthcare Holdings Limited (CGP). CDH Genetech is an entity wholly-owned by funds advised by CDH Investments.

The proposal has been amended such that it is now being made jointly by both CDH and its strategic partner, CGP (collectively the Bidders). Under the terms of the revised proposal (the CDH-CGP Proposal), the Bidders will jointly acquire Sirtex and are jointly and severally liable for the obligations to complete the acquisition. The material terms and conditions of the CDH-CGP Proposal are otherwise broadly consistent with those set out in Sirtex’s announcement of 22 May 2018.

As required under the terms of the scheme implementation deed with Varian Medical Systems, Inc. (Varian) (the Varian Scheme Implementation Deed), Sirtex issued a notice to Varian providing it with a right to submit a matching or superior proposal to the CDH-CGP Proposal. Consistent with its previous public statement, Varian has confirmed that it will not submit a matching or superior proposal to the CDH-CGP Proposal.

On completion of the CDH-CGP Scheme, Sirtex will be ultimately owned 51% by funds advised by CDH, and 49% by CGP.

About CDH

CDH is a China-based alternative asset fund manager with over US$20 billion of committed capital under management. CDH was established in 2002 and invests capital on behalf of leading international pension funds, endowments, family offices, corporates and sovereign wealth funds. CDH Fund V, L.P. (CDH Fund V) is an offshore USD private equity fund managed by CDH with US$2.6 billion of total capital commitments. Previous investments made by CDH-managed funds include:

  • partnering with a leading China manufacturer of small kitchen appliances to acquire Euro-Pro HoldCo LLC/SharkNinja, a leading US brand of vacuums and motorised kitchen appliances, for US$1.6 billion;
  • partnering with WH Group Limited, the largest pork company in China, to acquire Smithfield Foods, Inc. in the US for US$7.1 billion;
  • leading the acquisition of Fujian Nanping Nanfu Battery Company Limited, China's leading alkaline battery manufacturer, from Proctor & Gamble Co. for US$706 million;
  • the acquisition of GO Healthy New Zealand Ltd, a leading New Zealand health supplement manufacturer; and
  • co-investing with Belle International Holdings Limited, China's largest shoe retailer, to acquire Baroque Japan Limited, a leading Japanese apparel brand for US$360 million.

About CGP

CGP 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$2.2 billion. CGP is approximately 59%2 owned by China Grand Enterprises, Inc. (CGE), a Chinese conglomerate whose core businesses include the research, manufacture and sale of pharmaceutical products in China, including oncology therapies.

2 This comprises shares owned by CGE controlled subsidiaries Outwit Investments Limited, East Ocean Capital (Hong Kong) Company Limited and Shanghai China Grand Asset Finance Investment Management Co., Limited

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