Friday, June 05, 2015
Mindray Medical International Ltd. surged the most in almost three years as its top managers offered to buy out shareholders for about $2.6 billion in cash and take the Chinese medical device maker private.
The American depositary receipts soared 11 percent to $30.47 on Thursday in New York, rising the most since August 2012. Trading volume of 6.5 million shares was more than 9 times the full-day average of the past three months.
Mindray rallied as its three top executives, who control about 28 percent of the outstanding stock, offered to pay $30 a share to buy out the rest of the company’s investors, a 9.2 percent premium over Wednesday’s closing price. The proposal followed similar bids in April by U.S.-traded WuXi PharmaTech (Cayman) Inc. and China Cord Blood Corp., as China’s surging mainland equity market has pushed medical and biotechnology company valuations there to more than triple Mindray’s level.
“Management is doing this for valuation purposes,” Peter Halesworth, founder of Heng Ren Investments LP, which invests in Chinese stocks, said by phone from Boston on Thursday. While medical and biotechnology stocks may be worth more in mainland China, the prospects are better for them to hold their value in the U.S., Halesworth said.
Mindray will form a special committee to consider the non-binding proposal, and a definitive offer isn’t guaranteed, it said.
Stock Valuations
The company, which sells products from life-support devices to medical imaging systems globally, debuted in the U.S. in September 2006 and its stock price reached a record $44.99 more than a year later. It has slumped 32 percent since then.
The ADRs sell for about 18 times forward earnings, according to data compiled by Bloomberg. That compares with an average multiple of 58 for a group of closest Chinese peers. The valuations have soared as stocks in Shanghai surged more than 140 percent over the past year.
The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. added less than 0.1 percent to a one-week high of 134.18 Thursday.
The iShares China Large-Cap ETF, the largest Chinese ETF in the U.S. tracking Hong Kong shares, fell 0.6 percent to $49.34 after a three-day gain. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF sank 0.2 percent to $52.86.
bloomberg.com
