In key news on Hong Kong stocks, Shanghai Henlius Biotech Inc. (HK:2696) shares surged after the company agreed to a buyout offer from Fosun Pharma, part of Fosun International Limited (HK:0656). Fosun Pharma will acquire the remaining stake in Shanghai Henlius that it does not already own in a transaction valued at HK$13.37 billion. Under the deal, Fosun will pay HK$24.60 per share, which is 31% above the closing price on May 22, after which the company halted trading, awaiting takeover and merger-related announcements.
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Following the announcement, Shanghai Henlius shares gained nearly 20%, as of writing. Meanwhile, Fosun International stock was down 1.16%.
Shanghai Henlius Biotech is a biopharmaceutical company with a solid pipeline of clinical-phase cancer and autoimmune drugs. It operates as a subsidiary of Shanghai Fosun Pharmaceutical, owned by Fosun International, a Chinese conglomerate focused on various sectors.
Shanghai Henlius Biotech to go Private
With this deal, Fosun aims to merge Henlius with Shanghai Fosun Pharmaceutical and take Henlius private. Fosun emphasized that Henlius’s current listing status no longer grants significant access to capital and creates additional expenses for the company.
Additionally, Fosun expressed concerns that the underperformance of Henlius’s shares does not fully capture its intrinsic value as a global biopharmaceutical firm with a diverse product pipeline. With this merger, Fosun believes Henlius will concentrate on its core operations without being distracted by share price volatility.
In 2023, Henlius achieved revenue of approximately RMB5.4 billion, marking a 67.8% year-on-year increase. It generated a net profit of RMB546 million. The strong results were driven by higher sales of the company’s core products along with improved volume.
Shanghai Henlius Share Price Target
As per the TipRanks consensus rating, 2696 stock has received a Moderate Buy rating based on one Buy recommendation from CMB International Securities. The Shanghai Henlius share price target is HK$20.33, which is 8% above the current trading price.
