Chindex International Inc., a Bethesda, Md.-based healthcare company that operates hospitals in Beijing, Shanghai, Tianjin, and Guangzhou, announced on February 17 that it had been acquired by Shanghai Fosun Pharmaceutical Co. and private-equity firm TPG Capital for $369 million. The deal is still subject to approval from Chindex and Fosun shareholders as well as Chinese regulators.
As part of the agreement, Fosun Pharma will increase its 17.45 percent stake—which it purchased in August 2010 for $14 million—to 48.65 percent and TPG will acquire a 48.14 percent stake. The remaining shares will be held by Chindex’s CEO and founder, Roberta Lipson. Fosun plans to spend as much as $193.7 million to privatize Chindex, and it will invest an additional $45 million to gain full ownership in Chindex Medical Ltd., a joint venture medical device and instrument distributor established by Chindex and Fosun Pharma in December 2010.
The deal, if approved, could reap benefits for all three companies. With China’s healthcare sector estimated to reach $1 trillion by 2020, according to McKinsey & Company, the acquisition positions Fosun and TPG to have greater access to this fast-growing market. The deal also provides working capital that Chindex can use to overcome its expansion challenges in China.