China’s iKang Healthcare Group chairman faces competing $1.5 Billion takeover proposal from Sanyou's consortium

Monday, November 30, 2015

China’s iKang Healthcare Group Inc. received a preliminary $1.5 billion acquisition offer from an investor group that includes its main rival, setting the stage for a face-off with the company’s chairman who earlier this year made a bid to take the health-care service provider private.

IKang competitor Meinian Onehealth Healthcare Group Co. said in a statement on Sunday that it was part of a group of investors that had submitted a non-binding proposal to buy iKang for $22 in cash per American depositary share. That price is about 24 percent higher than an August bid of $17.80 per ADS led by iKang Chairman Ligang Zhang.

Shares of Beijing-based iKang, which provides preventative health-care services such as medical examinations, closed at $16.77 last week in New York trading, giving it a market capitalization of about $1.1 billion. In a statement published on Sunday on the company’s official WeChat account, Zhang said he wouldn’t sell shares he owns or controls to any third party and called Meinian’s competing offer "undoubtedly hostile."

"Currently, competition between iKang and Meinian Onehealth is becoming increasingly fierce," said Zhang in the statement. "This takeover bid may be intended to create psychological disturbances to iKang’s employees, customers and partners and to obtain improper competitive advantage."

Rising Demand

The consortium’s offer is "in accordance with laws and regulations of both China and the U.S., and open and transparent, and there is absolutely no ‘hostile’ takeover," said Meinian Chairman Yu Rong in an open letter published on Monday on the company’s official WeChat account.

Meinian had approached iKang about cooperation before the plans to take it private, and in the past two months Meinian’s efforts were met with resistance, said Yu in the statement.

China’s demand for health-care services is expanding as the incidence of diseases like cancer increases. Public hospitals have struggled to keep up and a growing middle class is increasingly willing to pay up for better care.

Meinian said its bidding group includes an arm of Ping An Insurance (Group) Co., Sequoia Capital China, China Taiping Insurance Holdings Co.’s asset-management unit, Huatai Ruilian Fund Management Co. and Cathay Capital Private Equity SAS. IKang’s founder and chief executive officer Zhang backed by FountainVest Partners made his offer in late August to take the Nasdaq-listed Chinese preventive care company private.

The consortium’s offer is 31 percent higher than iKang’s last closing price. Meinian Onehealth this year completed a backdoor listing through an asset and share swap with Shenzhen-listed Jiangsu Sanyou Group Co.