MENU

CDH Investments makes $1.9 billion bid for Sirtex Medical Limited (ASX:SRX)

CDH Investments is serious about the acquisition of Sirtex Medical Limited (ASX: SRX), the Australian life-sciences company that produces a selective internal radiation therapy (SIRT) for liver cancer sold in more than 40 countries.

The Chinese alternative asset manager made a binding cash offer on Tuesday that confirms the previous indicative proposal announced by Sirtex on May 4 and values the target at $33.60 per share, less any dividend of up to 30 cents per share. This amounts to a total valuation of $1.9 billion.

The offer entails a significant premium on the company’s May 3 closing price of $27.85, and is considerably higher than the competing bid from American cancer care company Varian, which offered $28 a share.

Varian’s proposal received the support of Sirtex’s board in January, resulting in a scheme implementation deed. This gives Varian the right to submit a counterproposal to the CDH bid, but yesterday the company made clear it doesn’t intend to change its offer, which it believes remains superior.

Despite the lower price, Varian’s bid does have some pros. It’s already been endorsed by Sirtex’s directors and received all necessary regulatory approvals, so it just needs shareholders’ vote to become effective. CDH instead would still need to get the green light from the Foreign Investment Review Board (FIRB), and from regulators in the other countries where Sirtex operates.

Sirtex’s board is considering the merits and risks of both proposals – including the offer prices, the risks, and timing to completion – and will recommend the offer in the best interests of shareholders. Pending the review, the board confirmed its unanimous support of the Varian scheme.

Amidst this uncertainty, Sirtex announced that in the first four months of 2018 sales declined 11% on the previous corresponding period. The company now expects FY18 underlying EBITDA at the lower end of the previously issued guidance of between $75 million and $85 million. At the time of writing, the stock is 4% down to $28.60.

Foolish takeaway

While CDH’s proposal would still need to get all the regulatory approvals that Varian has already obtained, I think the Chinese bidder has an edge.

If regulators permitted the acquisition once, I don’t see why they would deny it to CDH, and the offer price of $33.60 entails a 20% premium on the competing proposal, which is hard to ignore.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!