In the first nine months of 2017, Chinese investment in U.S. healthcare companies rose 300% compared with all of 2016. Shandong Weigao Group (1066.HK), a Chinese developer of single-use medical devices, announced its acquisition of Texas-based Argon Medical Devices on September 24, marking the 12th acquisition by a Chinese company in 2017.
Shandong agreed to pay $850 million for a 90% stake in the privately-held medical device maker. Argon develops, manufactures and sells devices for interventional radiology, vascular surgery, interventional cardiology, and critical care procedures, including biopsy products, drainage catheters and systems that remove blood clots. The company generated revenue of $225 million in 2016, producing a revenue multiple of 3.8x, according to Bloomberg.
Shandong made the acquisition through a joint venture with an unidentified private equity-backed firm that will control 10%, according to a statement to the Hong Kong stock exchange. The venture will fund $420 million of the purchase with debt.
Shandong has been looking to diversify its revenue stream to increase the contribution of sales from overseas markets. Argon Medical will benefit from Shandong’s sales and marketing network, as well as its extensive hospital and distributor coverage to expand its business into smaller cities in China.
This deal also marks the 77th in the Medical Device sector this year. The sector is down 14% from the same period in 2016.