Sinopharm Group (HK: 1099) announced a secondary offering of $440
million worth of its publicly held shares. The transaction will
comprise 4% of Sinopharm's expanded share base, raising the Hong
Kong-traded portion of its capitalization from 30.5% to 34.5%. The
company, which is mainland China's largest drug distributor, said it
will use the money to expand its distribution and retail networks.
The
shares will be offered at HK$25 per share, representing a discount of
8.3% to Sinopharm's last closing price of HK$27.25 on April 21.
Sinopharm reported solid results for 2010. Net income was up 25% at 1.2 billion RMB ($186 million).
After
the transaction, Sinopharm will remain controlled by China National
Pharmaceutical Group Corp. (CNPGC). CNPGC owns 2,728,396 Domestic
Shares directly and 1,571,555,953 Domestic Shares indirectly through
Sinopharm Industrial Investment Co., Ltd., which is 51% held by CNPGC.
The remaining 49% of Sinopharm Industrial Investment is owned by Fosun
Pharma, a subsidiary of the Hong Kong conglomerate Fosun International
(HK: 0656).
Sinopharm was the first of mainland China's
pharma-related companies to take advantage of Hong Kong's huge appetite
for China stocks. In September 2009, Sinopharm raised $1.2 billion from
its IPO, a large number at the time (see
story).
Now that rivals, such as Shanghai Pharma (SHA: 601607), are seeking as
much as $1.8 billion, Sinopharm apparently feels it is time to
replenish its cash so the company can remain competitive as drug
distributors gobble up smaller companies.