Fosun, Shanghai Pharma Bid for KKR-Backed Arbor

  • Chinese firms eye minority stake in U.S. specialty drugmaker
  • Shanghai Pharma, China Resources also pursue Cardinal business

Fosun International Ltd.’s health-care business and Shanghai Pharmaceuticals Holding Co. are among bidders for a stake in U.S. specialty drugmaker Arbor Pharmaceuticals LLC, according to people with knowledge of the matter.

Fosun and Shanghai Pharma are among potential acquirers competing to buy a stake of at least 20 percent to 30 percent, the people said, asking not to be identified because the matter is confidential. The holding in the Atlanta-based drugmaker, backed by KKR & Co., could fetch around $600 million to $700 million, the people said.

Arbor is raising new funds for growth ahead of a potential initial public offering, the people said. Some suitors are seeking to gain control of Arbor, while the company’s management prefers to sell a minority holding, according to the people.

Fosun, a prominent and prolific acquirer backed by billionaire Guo Guangchang, is continuing to pursue overseas transactions in the pharmaceutical industry even as it faces increased scrutiny from Chinese regulators over its dealmaking. Guo last month took the unusual step of highlighting his own support for the government’s clampdown on “irrational” foreign investments.

Market Access

Drugs made by Arbor include Edarbi, used to manage high blood pressure, and the BiDil treatment for heart failure in black Americans. It also sells Evekeo, which is prescribed for attention deficit disorder, as well as generic drugs through its Wilshire Pharmaceuticals Inc. unit and hospital products for patients with cancer and liver injuries.

Any transaction would add to the $292.6 billion of acquisitions announced in the health-care industry globally over the past 12 months, data compiled by Bloomberg show. Representatives for Shanghai Pharma and Fosun Pharma declined to comment. A representative for Arbor didn’t immediately respond to a request for comment.

Shanghai Fosun Pharmaceutical Group Co. is pursuing the Arbor transaction after a stymied attempt to buy Indian drugmaker Gland Pharma Ltd. for $1.3 billion. Chinese drugmakers are increasingly ambitious in buying assets that will give them access to the U.S., the world’s biggest pharmaceutical market.

Consolidating Distribution

Shanghai Pharma is separately weighing an acquisition of Cardinal Health Inc.’s Chinese operations as it looks to consolidate drug distribution operations in the country, two people familiar with the matter said. China Resources Pharmaceutical Group Ltd. is also considering an offer for the business, which could fetch more than $1.2 billion, one of the people said.

Cardinal Health said this month it plans to explore strategic alternatives for its service and distribution business in China. Shares of the company have fallen 19 percent over the past 12 months. 

A Cardinal representative declined to comment further. A representative for China Resources Pharma also declined to comment.

— With assistance by Jonathan Browning, Hui Li, and Jared S Hopkins

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