Status:  Upcoming/New Filing

Acquirer:  China Grand Pharmaceutical and Healthcare Holdings Limited (Bermuda; Hong Kong SAR, China; China); CDH Genetech, Ltd. (Cayman Islands; China)

Acquired:  Sirtex  Medical Limited (Australia)

Value:  Approximately A$1.9 billion (US$1.4 billion)

Industry(ies):  Healthcare; Biotechnology; Medical Devices

On June 14, 2018, China Grand Pharmaceutical and Healthcare Holdings Limited (“CGP”), a Hong Kong listed investment holding company,  CDH Genetech, Ltd. (“CDC”), a Cayman Island registered company, and Sirtex Medical Limited, an Australian listed (ASK code: SRX) medical device company providing oncology treatments for liver cancers using small particle technology, entered into a binding scheme implementation deed, in accordance with the rules of the Australian Stock Exchange, for the joint acquisition of 100% of Sirtex Medical by CGP and CDH.  (See CGP, HKSE filing, Major Transaction Notice, Jun. 14, 2018; see also Sirtex Medical Ltd., ASX filing, Sirtex Terminates the Varian Scheme and Enters into a Binding Scheme Implementation Deed with CDH Genetech and China Grand Pharma, Jun. 14, 2018.)  CGP and CDH will establish the “Bidders’ Nominee”, which will acquire the shares of Sirtex. (See CGP, HKSE filing, Major Transaction Notice, June 14, 2018.)  The Bidders’ Nominee will be 49% held by CGP and 51% held by CDH.  (See Id.)  CFIUS approval is not a condition to closing the acquisition, however, the parties “intend to voluntarily notify CFIUS of the proposed acquisition of Sirtex.” (Sirtex Medical Ltd., ASX filing, Sirtex Terminates the Varian Scheme and Enters into a Binding Scheme Implementation Deed with CDH Genetech and China Grand Pharma, Jun. 14, 2018.)

Sirtex has regulatory approval for “radioactive treatment for liver cancer called SIR-Spheres® Y-90 resin microspheres” and it has “manufacturing capabilities in the U.S., Singapore and Germany.”  (Sirtex Medical website, Company Overview webpage.)  CGP’s subsidiaries operate in “pharmaceutical preparations, medical devices pharmaceutical intermediates, specialized raw materials and healthcare products.” (CGE Healthcare website, Company Profile web page.)  “CGP is approximately 59% owned by China Grand Enterprises, Inc. (CGE),” which is controlled and ultimately and beneficially owned by Mr. Hu Kaijun, a natural person.  (see CGP, HK filing, Notice of General Meeting, Apr. 25, 2018; Sirtex Medical Ltd. Press Release, Proposed CDH Genetech and China Grand Pharma Acquisition of Sirtex, Jun. 14, 2018.)  China based CDH Genetech “is a company incorporated in the Cayman Islands whose principal business is investment holding. It is wholly-owned by CDH Fund V, L.P. (a limited partnership formed under the laws of Cayman Islands), whose general partner is CDH V Holdings Company Limited.”  (China Grand Pharmaceutical and Healthcare Holdings Limited, HKSE filing, Major Transaction Notice, Jun. 14, 2018.)   “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.” (Sirtex Medical Ltd. Press Release, Proposed CDH Genetech and China Grand Pharma Acquisition of Sirtex, Jun. 14, 2018.)

Sirtex Medical’s filing with the Australian Stock Exchange noted that “[t]he Board of Sirtex considers that the overall risk of CFIUS seeking to stop the CDH-CGP Scheme is low, having regard to CFH’s previous experience with CFIUS, the nature of Sirtex’s operations in the US, and the provisions contained in the CDH-CGP Scheme.” (Sirtex Medical Ltd., ASX filing, Sirtex Terminates the Varian Scheme and Enters into a Binding Scheme Implementation Deed with CDH Genetech and China Grand Pharma, Jun. 14, 2018.)  Under the provisions of the proposed Scheme, CGP and CDH are “contractually obliged to accept certain mitigating actions” if required by CFIUS as a condition for clearance, including: “restrictions on the access and management rights of the Bidders;” “holding all or an element of the US business under arrangements that delegate control to a third party, whilst retaining ownership;” or “outsourcing any operations involving collection, management or retention of US patient data and/or manufacturing and other activities involving handling of radioactive materials.”  (Id.) CGE Healthcare and CDH Genetech have deposited A$220 million in an Australian bank and “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 . . . agreeing to voluntarily to withdraw the application for approval of the transaction by The Committee for [sic] Foreign Investment in the United States.” (Sirtex Medical Ltd., ASX filing, Sirtex Terminates the Varian Scheme and Enters into a Binding Scheme Implementation Deed with CDH Genetech and China Grand Pharma, Jun. 14, 2018; see also Sirtex Medical Ltd., ASX filing, Sirtex Confirms Receipt of Balance of Deposit – $49 million, Jun. 28, 2018; but see China Grand Pharmaceutical and Healthcare Holdings Limited, HKSE filing, Major Transaction Notice, Jun. 14, 2018 (agreeing to fee of “A$220 million” upon such an event).)