David Gao Confirms Lawsuit Against China Biologic Products to Protect Shareholders’ Best Interests
August 29 2018 - 11:59AM
Business Wire
Filed in Response to the Board’s Egregious
Actions and Clear Breach of its Fiduciary Duty
Mr. David (Xiaoying) Gao, a shareholder of China Biologic
Products Holdings, Inc. (“China Biologic” or the “Company”)
(NASDAQ: CBPO), today confirmed that he filed a lawsuit against the
Company related to its private placement of shares to a select
investor group – including a private equity firm formed by Board
Chairman David Li.
The lawsuit was filed on August 27 in the Grand Court of the
Cayman Islands. It seeks to void and invalidate the agreements with
Centurium Capital Management Ltd., CITIC Capital MB Investment
Limited, Hillhouse Capital Management, Ltd. and PW Medtech.
On August 24, China Biologic announced that it had rejected a
non-binding proposal to acquire all of the outstanding common
shares of the Company for US$118.00 per share in cash. The proposal
represented an approximate 30% premium to China Biologic’s closing
share price on August 16, 2018, the last trading day before its
proposal was conveyed, and an approximate 40% premium to the
Company’s closing price on June 8, 2018, the last trading day
before CITIC Capital’s proposal to acquire the Company for
US$110.00 per share was conveyed.
In its announcement rejecting the proposal, the Board also
stated that it conducted a private placement of shares to the four
investors at US$100.90 per share, a 14.5% discount to the offer
price of US$118.00 per share. Two of the participants, Centurium
Capital and PW Medtech, are also associated with selected Board
members. Centurium Capital, which has taken over 50% of the new
shares, is led by David Li, and PW Medtech’s Chairwoman Ms. Yue’e
Zhang is a China Biologic Director.
Commenting on its decision to file the lawsuit, Mr. Gao said:
“As a China Biologic shareholder, I am outraged by the Board’s
unthinkable actions that come at the expense of the public
shareholders. The Board’s hastily arranged private placement
agreement with a small group of investors led by Chairman David
Li’s fund clearly demonstrates that the Directors are serving Mr.
Li’s personal interests and was clearly done in an attempt to
thwart a proposal that would have delivered immediate and
significant value to all shareholders.
“The Board is transferring significant financial value and
voting rights from shareholders to the Board’s handpicked
investors, led by a fund formed by Mr. Li, without giving all
shareholders the opportunity to participate.
“I have spoken to a number of fellow shareholders who share my
concerns over the Board’s actions, including their decision to
reject a compelling proposal without engaging in meaningful
discussions. The Board’s decision to move forward with such a
dilutive private placement has left me no choice but to file this
lawsuit to hold this entrenched Board accountable and ensure that
they act in the best interests of all shareholders.”
The lawsuit alleges or requests that the court takes a number of
actions, including:
- That certain definitive agreements made
in or about August 2018 between the Company and Centurium Capital
Management Ltd., CITIC Capital MB Investment Limited, Hillhouse
Capital Management, Ltd. and PW Medtech Group Limited (the
“Incumbent Management Consortium”) for the issue of 5,850,000
ordinary shares of the Defendant Company (representing 14.9% of the
Company’s ordinary shares post issuance) at a purchase price per
ordinary share of US$ 100.90 are invalid and unenforceable;
- That the issue of shares to the
Incumbent Management Consortium, whether pursuant to such
agreements or otherwise are invalid and void;
- An order that the Company reverse
and/or rescind any transactions carried out pursuant to such
agreements and rectify the register of members accordingly as may
be necessary to give effect to such reversal or rescission;
and
- An injunction to prevent any further
shares being issued by the Company to the Incumbent Management
Consortium without a prior resolution of the members of the
Company.
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version on businesswire.com: https://www.businesswire.com/news/home/20180829005549/en/
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