SHC Capital

SHC Capital: Entered a one-month non-binding MOU to acquire Tong Da Medical Device (TDMD) for $120m via the issue of new shares, which will result in a reverse takeover transaction.

TDMD manufactures medical equipment and supplies used in anatomical pathology in China, with operations based in Xiaogan City, Hubei Province.

If the deal goes ahead, the vendors will take control of ~85.1% of the enlarged share capital of SHC.

Prior to the completion of the acquisition, the vendors have agreed for SHC Capital to return the bulk of its available cash reserves (~$45m) to shareholders, which translates to $0.147/share.

The purchase consideration values TDMD at a relatively appealing FY14 P/E of 10x compared to SGX-listed medical equipment manufacturer Biosensors' 33.1x.

As a backdrop, SHC disposed its insurance business to German insurance giant ERGO International in Aug '14 and became a cash company. The group has up to 12 months to seek a new business, or face delisting.