Australian medical device firm Sirtex Medical has agreed to a binding scheme implementation deed for A$1.9bn ($1.43bn) acquisition proposal from Chinese company CDH Genetech and its strategic partner China Grand Pharmaceutical and Healthcare (CGP).
The proposal was originally made last month for purchase by CDH Genetech alone. It has now been amended so that CDH and CGP will jointly carry out the transaction covering 100% of Sirtex’s shares.
Sirtex has entered another agreement in January this year, under which US-based Varian Medical Systems intended to buy the firm for approximately A$1.58bn ($1.28bn) or A$28 ($21.08) per share.
As Varian has decided to not make a matching or superior proposal to that of CDH-CGP’s A$33.6 ($25.3) per share, Sirtex board members agreed to pursue the higher bid and will terminate the deal with Varian.
Sirtex Medical interim chairman John Eady said: “The board has undertaken a comprehensive investigation of the merits and risks of the CDH-CGP proposal, including seeking specialist advice in relation to specific regulatory, legal, funding and other risks.
“Based on the materially higher offer price and our evaluation of the associated risks, the board of Sirtex has formed the unanimous view that the CDH-CGP proposal is a superior proposal and is in the best interests of shareholders.”
Sirtex said that CDH and CGP plan to indemnify the A$16m ($12.04m) break fee required to be paid to Varian because of the decision to terminate the previous agreement.
The company expects that the Chinese deal will help in boosting its business through entry into new markets.