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Chinese consortium to buy into nutritional pharmaco

Chinese consortium to buy into nutritional pharmaco

A deed struck between vitamins and supplements company Vitaco and a Chinese consortium is the first scheme of arrangement in Australia for a non-resources sector transaction.

Firms: MinterEllison (Vitaco Holdings Ltd); King & Wood Mallesons (Shanghai Pharmaceuticals Holding Co Ltd; Primavera Capital Group)

Deal: Vitaco Holdings (Victaco) has entered into a scheme implementation deed for the full acquisition of its share capital by a Chinese consortium comprising Shanghai Pharmaceuticals (Shanghai Pharma) and Primavera Capital Group (Primavera).

Value: $313 million

Area: M&A

Key players: The MinterEllison team advising Vitaco was led by partners Michael Gajic and Daniel Scotti (pictured). Senior associate Nicole Sloggett, associate Reiteke Grosser and lawyer Jason Namkoong assisted.

The KWM team advising the Chinese consortium was led by Sydney-based partner Shannon Finch and Beijing-based partners Xu Ping and Jonathan Grant (pictured). Senior associate Clifford Sandler and lawyers Tom Harrison, Huang Yunzhu and Kenny Chen assisted the partners with other colleagues across the firm’s offices in China, Hong Kong and Australia.

Deal significance:

ASX-listed company Vitaco has announced a proposal for a consortium to acquire 100 per cent of its share capital. Under the proposed scheme of arrangement, shareholders of the vitamins and dietary supplements company will receive AU$2.25 per share, valuing Vitaco at approximately AU$313 million.

The consortium comprises Chinese companies Shanghai Pharma and Primavera. Shanghai Pharma is one of China's leading pharmaceutical companies and is listed on both the Shanghai Stock Exchange and Hong Kong Stock Exchange. Primavera is an investment firm based in Asia.

According to MinterEllison partner Daniel Scotti, attracting interest from a “high-calibre regional player” such as the Chinese consortium not long after Vitaco’s IPO showed strong business interest in the sector.

“[This deal] highlights the interest in the vitamins and supplements sector and is an excellent result for the company and its shareholders in an uncertain economic and regulatory environment,” Mr Scotti said.

“We are delighted to have acted for Vitaco on this transformative transaction,” he said.

Vitaco’s business offers vitamins and supplements, sports nutrition and health foods in the Australian and New Zealand markets. The company is involved in the development and manufacturing of “world-class nutrition products”, and is expanding its focus on offshore markets.

The deal remains subject to approval from Vitaco shareholders and relevant regulators. Shareholders will vote on the proposal in November, with implementation of the scheme expected to occur in December 2016.

KWM senior partner Xu Ping, who is based in the firm’s Beijing office, said the deal required meeting regulatory requirements in both China and Australia.

“This deal once again proves KWM’s capabilities to guide Chinese clients through the legal maze in making overseas investments and implementing their globalisation strategy,” Ms Ping said.  

KWM partner Jonathan Grant added that the transaction involved the management of complex cross-border legal, regulatory and transaction management issues.

“The KWM global team […] was able to successfully negotiate a deal with Vitaco that addressed those complex issues while delivering funding and execution certainty for Vitaco and its shareholders,” Mr Grant said.

KWM partner Jonathan Grant
L-R: MinterEllison partner Daniel Scotti and KWM partner Jonathan Grant.

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