At the beginning of 2024, a merger and acquisition in the medical field was born, which has become the most concerned hot spot in the market today.
A few days ago, Mindray Medical, a leading domestic medical device, announced that it intends to use 66500 million yuan of its own funds to achieve the acquisition of control of Huitai Medical, a medical device company listed on the Science and Technology Innovation Board, and quickly lay out the subdivision track in the cardiovascular field.
This move indicates that the two leading companies in the industry are actively seeking industrial cooperation, and after the completion of the merger, Mindray's business layout in the cardiovascular field will be strengthened. It is reported that this transaction is also the first case of "A control A" on the Science and Technology Innovation Board. Some of the shares acquired this time come from two venture capital institutions: Qiming Venture Capital and Chenyi Investment. Behind Chenyi Investment is Liu Xiaodan, known as the "Queen of M&A", and Qiming Venture Capital is a veteran venture capital institution focusing on investment in the medical field.
Affected by this news, as of today**, Huitai Medical rose 457%, closing at 377 yuan, with a market value of 2520.7 billion yuan; Mindray Medical reported 269 yuan, with a market value of 326.1 billion yuan.
Specific to the details of the transaction, this acquisition adopts the method of "transfer by agreement + waiver of voting rights by the original actual controller". The method of operation is that Mindray Medical announced that it intends to transfer 47112 yuan shares, the acquisition of about 14.12 million shares of Huitai Medical, accounting for 21 of the total share capital of Huitai Medical12%, and the acquisition amount was 665.2 billion yuan.
It is reported that the acquired shares come from the three shareholders of Huitai Medical, Cheng Zhenghui, Cheng Ling, Dai Zhenhua, and the investors of Huitai Medical - Shanghai Huishen Venture Capital Center (Limited Partnership), Shanghai Huizhi Enterprise Management Center (Limited Partnership), Suzhou Industrial Park Qihua Phase III Investment Center (Limited Partnership), Suzhou Industrial Park Qiming Rongke Equity Investment Partnership (Limited Partnership), Suzhou Qiming Rongying Venture Capital Partnership (Limited Partnership), QM33 Limited, Yangzhou Hunxu Equity Investment Partnership (Limited Partnership).
At the same time, Shenmaikong signed an equity transfer agreement with Chenyi Hongqi, and Shenmaikong intends to acquire all 012% general partnership interest, the latter holds 349% of the shares. From a penetrating point of view, there are two main investment institutions behind it - Qiming Venture Capital and Chenyi Investment. Exit through mergers and acquisitions has also become the preferred exit channel for many primary market investment institutions this year.
Judging from the domestic exit data, in the first three quarters of 2023, IPO is still the main exit method for VC PE institutions, followed by equity transfer, accounting for 733% and 133%, the number of mergers and acquisitions continued to decline, accounting for 59%。This year, a number of venture capital institutions have said that they are optimistic about China's M&A exit from the market, and there is still huge potential.
From the perspective of the two parties, Mindray's main products cover three major sectors: life information and support, in vitro diagnostics and medical imaging, and the product line is the most comprehensive among domestic peers. In addition, the company has made a smooth breakthrough in the overseas market in recent years, and its operating income in 2022 ranks 27th in the global medical device industry, making it a well-deserved leader in domestic medical devices. The acquiree, Huitai Medical, has been deeply involved in the cardiovascular track for many years, has a solid position in the fields of cardiac electrophysiology, coronary access, and peripheral vascular intervention, and has mastered the full line of R&D and production capacity from upstream raw materials to products, and is a leading enterprise in the cardiovascular field in China.
As for the business characteristics of Huitai Medical, the company was founded in 2002 and listed on the Science and Technology Innovation Board in January 2021, mainly engaged in the research and development, production and sales of electrophysiology, coronary access and peripheral vascular intervention. According to the annual report data, Huitai Medical will achieve a net profit attributable to the parent company of 3 in 20225.8 billion yuan, a year-on-year increase of 7219%, and the net profit attributable to the parent company is expected to be 51 billion yuan - 56.5 billion yuan, a year-on-year increase of 42%-58%.
Mindray Medical said that in the short term, the company will achieve synergy with Huitai Medical in research and development, and in the medium and long term, it will achieve synergy in marketing. Mindray Medical has the ability to cover the global market, and Huitai Medical, as a leader in the cardiovascular segment, will reach global customers more quickly through Mindray's marketing network.
It should be noted that after the completion of this transaction, it is expected to add about 6.5 billion yuan to 7 billion yuan of goodwill to Mindray Medical's consolidated statements. Mindray believes that by giving full play to the potential of R&D synergies, it will minimize the risk of impairment of goodwill and promote the long-term sustainable growth of Huitai Medical.
Li Chanjuan, an analyst at Huachuang Pharmaceutical, believes that Huitai Medical, as a leading enterprise in the cardiovascular field in China, has a layout in the fields of electrophysiology, coronary access, and peripheral vascular intervention, and has domestic leading technological innovation capabilities, as well as the research and development, production capacity and process of consumables from raw materials to products. Mindray is firmly optimistic about the future development potential of the cardiovascular field, and entering the cardiovascular track will also greatly increase Mindray's accessible market space, which is of great significance to help Mindray achieve rapid growth in long-term performance.
*:* Times.com Venture Capital Exchange.