November 24, 2014
By Riley McDermid, BioSpace.com Breaking News Editor
Chinese drug distributor Sinopharm Group Co. fell more than 7 percent in morning trading Monday after it announced it would raise $716 million for a share sale designed to fund an expansion of its drug distribution network.
“The company intends to use the net proceeds from the placing of the expansion of the pharmaceutical distribution and retail network and replenishment of liquidity after the expansion,” said Sinopharm in a statement.
Under the terms of the offering, the company will sell as many as 198.8 million H shares at around HK $28.40 each, a 7.5 percent discount from the stock’s last closing price of HK $30 at Friday’s close.
Sinopharm had been on a roll lately, skyrocketing more than 30 percent over the last year after Chinese authorities rolled massive amounts of capital into the country’s booming healthcare system. But investors typically don’t like to see a company selling off massive chunks of share value, a slice that amounts to around 7.74 percent, in Sinopharm’s case.
The company has spent most of the last year trying to improve integration and efficiency and devoted the first half of 2014 to examining and implementing cost-saving measures at it streamlines its business model going forward.
CICC, UBS and Morgan Stanley will act as bookrunners in the share placement deal.
