iKang Healthcare Group, Inc. (NASDAQ: KANG) has posted a long string of acquisitions in recent years, as the Chinese healthcare company expanded its reach into that country’s largest cities. As of March 26, 2018, iKang owned and operated a network of 110 medical centers in 33 cities in China.
iKang is one of China’s largest providers of private preventivie healthcare. Its customer base is comprised primarily of corporate clients who contract with iKang to deliver medical examination services to their employees and clients, and receive those services at pre-agreed rates. The company also directly markets its services to individual customers. At the end of 2017, iKang served a total of 5.64 million customer visits through both corporate and individual programs.
Besides having a presence in 33 of China’s most affulent cities, iKang has extended its coverage to more than 200 cities by contracting with more than 400 third-party facilities, which include select independent medical examination centeres and hospitals across all of China’s provinces.
Back in June 2016, iKang recieved a preliminary non-binding proposal letter from Yunfeng Capital, proposing a going-private transaction in which Yunfeng Capital would acquire all of the outstanding Class A common shares, Class C common shares and American depositary shares (ADSs, each representing ½ of a Class A share) in an all-cash transaction for US$20.00 to US$25.00 per ADS or US$40.00 to US$50.00 per share.
That proposal effectively put an end to a previous proposal made in August 2015, in which iKang’s chairman and CEO, Ligang Zhang and certain of his affiliated entities, would take the company private.
On March 26, 2018, iKang announced its acquisition by IK Healthcare Investment Limited, which was formed as a joint venture between Yunfeng Capital and Alibaba Group Holding Limited.
The final price, an estimated $1.6 billion, consists of a cash consideration of $41.20 per Class A common share or Class C common share, or $20.60 per American depository share, plus $179.2 million of assumed debt.
Once completed, the merger will result in iKang becoming a privately held company and its shares will no longer be traded on the NASDAQ Global Select Market. This merger is expected to close in the third quarter of 2018.
Immediately following the merger, Lee Ligang Zhang, chairman and CEO of IK, and Boquan He, vice chairman of IK, will own shares representative of 43.1% of the total voting power of outstanding shares.
