Chindex to be acquired by TPG and Fosun Pharma

Under the terms of the merger agreement, which has been approved by the company’s board upon the recommendation of the board’s transaction committee of independent and disinterested directors, the Buyer Consortium will acquire all of the outstanding shares of Chindex’s common stock for $19.50 per share in cash.

This price represents an implied premium of approximately 14% over the current market price, 17% over the volume weighted average trading price for the last 30 days, and 86% over the closing share price since the formation of the transaction committee on 26 December 2012. The transaction will result in Chindex becoming a private company.

Chindex board chairman and transaction committee chairman Kenneth A Nilsson noted the transaction committee and its advisors conducted disciplined, independent and extended negotiations with the Buyer Consortium to ensure the best outcome for our unaffiliated stockholders.

"This is an opportunity for our unaffiliated stockholders to recognize a substantial return on their investment in Chindex despite the low liquidity of our shares in the equity market. Chindex has encountered limitations on its ability to unlock projected value without substantial capital expenditures and funding currently unavailable to the Company," Nilsson added.

Roberta Lipson, a founder and the CEO of Chindex, who will remain as CEO and roll over substantially all of her equity in the transaction noted bringing in the expertise of TPG and Fosun will be a win for its existing business, its expansion plans and the patients and communities it serves and hopes to serve.

"Over the last 15 years, Chindex has built its United Family Healthcare network into a premium brand, but we believe that new partners and committed financing are needed to achieve the next phases of these plans, including new facilities in our current service locations as well as significant geographic expansion. Together with Fosun and TPG, we will be able to continue developing our capabilities to offer comprehensive healthcare services of the highest quality across the entire life cycle of our patients," Lipson added.

Under the terms of the agreement, there is a so-called ‘go-shop’ period, during which the company and its advisors are permitted to actively solicit and consider alternative proposals from third parties through 3 April 2014, plus a potential 15-day extension, and the company management and Fosun are permitted to enter discussions with parties that make alternative proposals during that period.

Chindex does not anticipate disclosing developments with respect to this process unless and until the transaction committee and the company’s board of directors make a decision regarding a potential superior proposal or the expiration of the go-shop period. There can be no assurances that this process will result in a superior proposal. In addition, the Buyer Consortium may, subject to the terms of the merger agreement, respond to such proposals.

Completion of the transaction is subject to certain conditions, including, among others, the approval by Chindex stockholders, the approval by a majority of Chindex disinterested stockholders, the approval by stockholders of Shanghai Fosun, the approval under Chinese antitrust laws, and other customary closing conditions.

The transaction will be financed through cash contributed by TPG, a combination of cash and equity contributed by Fosun and equity contributed by Lipson and other management members. The transaction is not subject to a financing condition. Assuming the satisfaction of conditions, the company expects the transaction to close in the second half of the 2014 calendar year.

Morgan Stanley is serving as financial advisor and Hughes Hubbard & Reed is serving as lead legal advisor to the transaction committee of the board of directors of Chindex in connection with the transaction.

Goldman, Sachs & Co. is serving as financial advisor, Cleary Gottlieb Steen & Hamilton is serving as lead legal advisor, and Fangda Partners is serving as PRC counsel to TPG. Baker & McKenzie is serving as Fosun’s legal advisor. Skadden, Arps, Slate, Meagher & Flom is serving as lead legal advisor of Ms. Lipson and other senior management.