Cordlife: Major shareholder Golden Meditech (GM) has put out a much-anticipated privatisation bid of US$6.40 per share for China Cord Blood Corporation (CCBC).
While the offer price appears on the low side, it is still above the US$6.00 valuation for CCBC used in Maybank-KE’s SOTP valuation for Cordlife.
To re-highlight, financial investor Jayhawk Capital (second largest shareholder with 14.6% stake) had earlier in March written an open letter to the board of CCBC, pointing out CCBC’s undervaluation. As such, some market watchers are speculating that the latest offer might not be attractive enough to entice current shareholders.
The offer however does set a floor for CCBC’s share price and opens up room for higher counter-offers, possibly from financial investors like Jayhawk.
Given Cordlife’s 14.2% stake in CCBC, Maybank-KE is of the view that securing control of Cordlife would prove valuable to both sides, as they attempt to lock in Cordlife’s stake in CCBC.
Overall, Maybank-KE is maintaining its Buy call on Cordlife, but raises its TP to $1.62 from $1.35 (SOTP methodology) as the houses bumps up CCBC’s valuation to US$7.00.
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