Wuxi Biologics said on Tuesday that a substantial shareholder of the Company (Wuxi Biologics Holdings Limit) has entered into a block trade agreement to place 108 million existing shares at HK$107.00 each, a 6.8% discount to the stock's closing price Monday.
The placement would raise ~HKD 11.6 bn (~USD1.5 billion), represents about 2-3% of Wuxi's total issued share capital. This comes after Wuxi Biologics' placement of new shares in February this year to raise ~HKD13 bn, which the Company said would be used for mergers and acquisitions in drug manufacturing, as well as to expand manufacturing for technology platforms.
This kind of share placements is not new; in fact Wuxi Biologics Holdings has conducted ~10 rounds of existing share placement in the past, with its equity interest reduced from >60% initially to <20% after the current round of share placement. We believe the current round of share placement is, similar to the past placement, driven by institutional shareholder of Wuxi Biologics Holdings from a profit taking perspective, and hence have no material impact on Wuxi Biologics itself in the long run.
As you can see from the chart below, the Company's valuation has not been impacted by past placements.
Source: Bloomberg
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