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Chinese firm makes last-minute US$1.4b offer for Australia's Sirtex


CHINESE private equity firm CDH Investments lobbed a last-minute US$1.4 billion offer for Australian liver-cancer treatment firm Sirtex Medical, trumping Varian Medical Systems days before the US firm was set to seal a takeover deal.

CDH's A$33.60 surprise cash-per-share offer is fully a fifth higher than Varian's, at A$28 per share, and it lands amid a multibillion dollar shopping spree from Chinese interests in Australia's healthcare sector.

Sirtex said on Friday it will seek to postpone a shareholders' meeting, scheduled for Monday, that was to vote on the Varian deal, though its directors continue to support the Californian firm's offer. Sirtex shares jumped to an 18-month high, before closing 5.6 per cent higher at A$29.42.

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"Geez, I wouldn't say this is a normal occurrence," said Simon Mawhinney, chief investment officer at fund manager Allan Gray, of the 11th-hour bid. Allan Gray is Sirtex's largest shareholder, with a 6.3 per cent stake as of September last year.

"We obviously welcome with open arms higher offers, but it's certainly not something we were expecting this late in the piece," he noted. "I'm inclined to do nothing until I hear from the company and see what they advise ... it's pretty much a wait-and-see."

Australia has proven an attractive destination for Chinese investment in the healthcare sector, with A$5.5 billion (S$5.5 billion) in deals agreed since 2015, according to a report published in January by KPMG, mostly from private firms interested in acquiring technology.

The bid also lands in the midst of a dealmaking surge at the big end of the biotech and drugmaking sector, capped by Japan's Takeda Pharmaceutical Co offering US$64 billion to British rare disease specialist Shire.

Sirtex, which had not run a sales process before Varian's offer, said it had no engagement with Beijing-based CDH until Friday's bid.

Founded in 1997 by Bruce Gray, who developed the tiny radiation-impregnated beads that are the basis of the firm's liver cancer treatments, Sirtex had swung to a full-year loss in 2017 after its technology failed in three major tests.

The firm says the technology is clinically proven and delivers "positive outcomes" for patients with liver cancer. It turned in a half-year profit of A$23.6 million in February. Its shares had halved over the past two years until Varian's offer was announced in January, an offer the company recommended at the time as an "attractive outcome".

On Friday Sirtex said the CDH offer was non-binding and would require approval from Australia's Foreign Investment Review Board, which Varian's bid had already won in March.

"The directors of Sirtex continue to believe the existing scheme of arrangement with Varian is in the best interests of Sirtex shareholders," the company said in a statement.

Varian chief executive Dow Wilson said in a statement its offer was superior to the rival bid and it remains ready to complete its purchase. REUTERS