① Gree Real Estate will seek a “successor” for its 5% stake in Kehua Biotech at a price that exceeds double the premium. ② Industry insiders said that with this price combined with Kehua Biotech's fundamentals, no one is likely to take over. ③ It is worth paying attention to how Shengxiang Biotech, which had the intention to take over two years ago and has priority purchasing rights, will act.
Financial News Agency, 12th, 14th (Reporter He Fan) The closing price of Kehua Biotech (002022.SZ) today was 8.88 yuan/share, and the reference value for net assets per share was as high as 9.36 yuan/share, but its largest shareholder, Zhuhai Baolian (a wholly-owned subsidiary of Gree Real Estate) plans to find a “successor” for Kehua Biotech's 5% shares at a price of 20 yuan/share, that is, more than double the premium. At the same time, the proposed transferee will also obtain voting rights corresponding to Kehua Biotech's 10.64% shares held by the Zhuhai Insurance Federation, thus becoming Kehua Biotech's No. 1 Major shareholders.
For a while, the pricing basis for this equity transfer and the transfer prospects sparked controversy in the market. Some industry insiders told the Financial Services Association reporter that the core of the largest shareholder's pricing is probably that they don't want to sell at a lower cost price, but this price combined with Kehua Biotech's fundamentals probably won't let anyone take over. However, it is worth paying attention to how Shengxiang Biotech (688289.SH), which had the intention to take over two years ago and held priority purchasing rights, will act.
What is the intention to sell shares at a high price?
This evening, Gree Real Estate (600185.SH) and Kehua Biotech announced that Gree Real Estate's subsidiary, Zhuhai Baolian Investment Holdings Co., Ltd., plans to transfer 5% of Kehua Biotech's shares by agreement through a public solicitation of transferees. The transfer price will not be less than 20 yuan/share (inclusive), and the final transfer price will be determined after approval by the competent authorities. At the same time, it is planned to entrust voting rights corresponding to Kehua Biotech's 10.64% shares to the transferee free of charge. The largest shareholder of the company may change if this public offering, transfer and entrustment of voting rights is completed.
However, the Finance Association reporter did not see any statement in this transfer announcement about how the shares corresponding to this part of the delegated voting rights will be disposed of in the future.
As soon as the announcement was issued, the reason for this was that the minimum transfer price of 20 yuan/share (inclusive), even if dividends and other factors were not taken into account, whether it was compared to the latest closing price (8.88 yuan/share), the arithmetic average of the daily weighted average price for the 30 trading days before the indicative announcement (9.02 yuan/share), or the audited net asset value per share of the listed company in the most recent fiscal year (9.36 yuan/share), was more than doubled.
Regarding the reason for determining the reserve price for the above transfer, Kehua Biotech announced that it was a “comprehensive consideration of various factors.”
Why is there such a big gap between the middle? The answer may be related to the price of Gree Real Estate's acquisition of Kehua Biotech. At the time, the transaction price was equivalent to a unit price of about 18 yuan/share.
In an interview with a reporter from the Financial Association, a person in the private equity industry said that this pricing is probably to maintain that the investment can bring positive investment returns to shareholders; the core point is that it must not be lower than the cost price. It is currently uncertain whether someone will take over in the future, but at present, it is unlikely. Buying a loss-making company at a large premium is not in line with commercial logic, yet the company has the power to price it this way.”
Who will take over?
Indeed, in May 2020, Gree Real Estate purchased 18.63% of Kehua Biotech's shares from Kehua Biotech's first major shareholder through the Zhuhai Insurance Federation. The total transaction price was 1,726 million yuan, equivalent to a unit price of about 18 yuan/share.
However, just one year from now, Gree Real Estate plans to transfer all 95.863 million shares of Kehua Biotech held by the Zhuhai Insurance Federation to Shengxiang Biotech at a transfer price of 1.95 billion yuan, equivalent to 20.34 yuan per share. However, the “miscarriage” was transferred 3 months later.
After a lapse of more than two years, Gree Real Estate is once again planning to transfer the position of the largest shareholder of Kehua Biotech. However, at this time, the performance of Gree Real Estate and Kehua Biotech is not good. Gree Real Estate lost all year last year, and lost 313 million yuan in the first three quarters of this year, while Kehua Biotech lost 0.2 billion yuan in the first three quarters of this year.
The private equity source mentioned above said that Gree Real Estate itself does not use pharmaceuticals, there is uncertainty about cross-border mergers and acquisitions, and the situation in its industry over the past two years has not been very optimistic. The company's own cash flow is relatively tight, so it is understandable that it is also understandable to put the sale of assets on the agenda.
The current transfer price is also “quite interesting” if you compare it with the price that Gree Real Estate took over at the beginning and the price that was previously planned to be transferred to Shengxiang Biotech. Based on the price of 20 yuan/share, the price of this 5% equity transaction is about 514 million yuan, which is higher than the price corresponding to this portion of shares when Gree Real Estate was taken over by Zhuhai Insurance Union in 2020 (about 463 million yuan), but lower than the price corresponding to this portion of shares when Shengxiang Biotech plans to transfer in 2021 (about 523 million yuan).
It is worth noting that at the beginning, the unit price that Shengxiang Biotech intended to transfer was over 17% compared to Kehua Biotech's closing price in the secondary market at the time. When the transfer was initially terminated, Shengxiang Biotech also agreed with the Zhuhai Insurance Federation that if Kehua Biotech shares held by the Zhuhai Insurance Federation were transferred to the outside world again, Shengxiang Biotech would have priority purchasing rights under the same conditions, and that priority would be irrevocable.
So, will Shengxiang Biotech exercise priority purchasing rights? The Finance Association reporter will continue to pay attention to this.