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Shanghai Pharma buys Cardinal

State-owned Shanghai Pharmaceuticals Holding Co has agreed to acquire Cardinal Health Inc’s China drug distribution business for $557 million, as it seeks to expand its distribution and retail network nationwide.

The acquisition will also help Shanghai Pharma, China’s third-largest drug distributor, become a leading importer of foreign medicine into the world’s second-largest drug market.

The deal, which includes shareholder loans, gives Cardinal’s business in the Chinese mainland and Hong Kong an enterprise value of $1.2 billion, equivalent to about 15 times its adjusted earnings before interest, taxes, depreciation and amortization for the year ended June, Shanghai Pharma said in a statement.

The sale drew keen interest from Statebacked Chinese pharmaceuticals companies and private equity firms such as Warburg Pincus and Hong Kong-based FountainVest, sources with knowledge of the matter have said.

Comment sought on exchange deal

The US Securities and Exchange Commission (SEC) on Tuesday asked for public comment on a revised takeover proposal of the privately held Chicago Stock Exchange by a group led by a China-based investor after two other investors from China dropped out of the consortium.

The SEC’s staff approved the deal in August, but the regulator immediately stayed the decision, giving it more time to consider the politically sensitive sale.

Two Chinese investors Chongqing Jintian Industrial Co and Chongqing Longshang Decoration Co, which had agreed to invest about $8 million as part of a consortium that offered up to $25 million dropped out of the deal, the Wall Street Journal reported earlier.