Shanghai Fosun group returns to M&A with planned bid for KKR-backed Gland Pharma

Shanghai Fosun Pharmaceutical (Group) Co has made a non-binding proposal to buy India's Gland Pharma, which is backed by KKR and valued at up to $1.5 billion, to boost its drug manufacturing and research and development capacity.

Shanghai Fosun`s announcement on Monday of its interest in Gland Pharma is the first major move on a deal by the Fosun group of companies since Guo Guangchang, one of China`s best-known entrepreneurs and the founder of flagship investment holding company Fosun International, briefly went missing late last year.

The move is also a departure from the group`s strategy of largely targeting companies in developed markets and comes after sources said last week that Fosun International was among suitors bidding for ACR Capital Holdings, the owner of Singapore`s biggest reinsurance firm.

Gland Pharma founders and KKR, who jointly own about 96% of the Hyderabad-based injectable drugs manufacturer, are selling their combined stake, valued at between $1 billion and $1.5 billion, people with direct knowledge of the matter told Reuters in April.

Global buyout firm Advent International and US-based Baxter International are also among suitors preparing to submit separate bids to buy Gland Pharma, the people had said. Advent, Baxter and KKR had declined to comment. 

Shanghai Fosun said the proposal was made through its unit Fosun Industrial Co Ltd. The company gave no further details.

Shanghai Fosun shares closed up 0.9% on Monday, in line with a 0.7% rise in the benchmark Shanghai share index. The company has a market value of about $6.5 billion.

DRIVING FORCE

Billionaire Guo has been the key driving force behind the group`s M&A push and his disappearance had raised concerns about Fosun and its group companies` ability to pursue outbound deals. He returned to work after assisting authorities with an investigation.

Fosun has slowed down on acquisitions after spending about $30 billion in outbound M&A over the past two decades, largely acquiring insurance companies and other real estate assets mainly in Europe and the United States.

In recent months, Fosun has scrapped bids for Israeli insurer Phoenix Holdings Ltd and Anglo-German banking group BHF Kleinwort Benson Group and is more focused on bringing its debt under control.

But Guo, a self-styled disciple of Warren Buffett, told Bloomberg this month the company will actively look for investments in countries including Brazil, Russia, India and China as there are fewer investment opportunities in Europe and the United States as the overall valuations have come expensive.