Shares of the Hong Kong-based WuXi AppTec Co. (HK:2359) fell sharply by over 13% as of writing after the company announced a $500 million convertible bond offering. The offering came a month after the U.S. implemented regulations to limit business with the company due to national security concerns.
In September, WuXi AppTec made headlines when the U.S. House of Representatives passed a restrictive bill limiting its funding and operations in the U.S. This led to WuXi AppTec shares plummeting over 8% in a single day.
WuXi AppTec offers research, development, and manufacturing services, supporting pharmaceutical and biotech companies globally.
WuXi AppTec Raises $500 Million via Convertible Bonds
According to WuXi AppTec’s statement, it issued zero-coupon notes maturing in 2025. The initial conversion price for the bonds is HK$80.02 per share, which reflects a 16% premium over the stock’s closing price on Monday.
WuXi AppTec’s board believes that issuing the bonds will provide funds to support the company’s global expansion and refinance debt in the long run. This will further help the group’s overall growth and development.
WuXi AppTec Struggles as U.S. Imposes Restrictions
Last week, Reuters reported that WuXi AppTec is considering selling parts of its operations following the crackdown by the U.S. on national security grounds. Additionally, the company is exploring options for its cell and gene therapy manufacturing division WuXi Advanced Therapies, which has four laboratories and production facilities in Philadelphia.
The bill was initially proposed in December, primarily driven by worries over the potential misuse of Americans’ health data by Chinese organizations. It prevents U.S. federal agencies from engaging in contracts or providing funds to Chinese biotech firms. China’s foreign ministry has labelled the U.S. bill as “discriminatory.”
The legislation needs to be approved by the U.S. Senate before it can be forwarded to President Joe Biden for his signature.
What Is the Price Target for WuXi AppTec Stock?
As per the consensus rating on TipRanks, 2359 stock has received a Strong Buy rating supported by four Buy recommendations. The WuXi AppTec share price forecast is HK$65.94, implying a potential downside of 4.43% from the current level.
