UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Schedule 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
SINOVAC BIOTECH
LTD.
(Name of Subject Company)
SINOVAC BIOTECH LTD.
(Name of Person Filing Statement)
Common Shares, par value $0.001 per share
(Title of Class of Securities)
P8696W104
(CUSIP Number of Class of Securities)
Nan Wang
Chief Financial Officer
No. 39 Shangdi Xi Road
Haidian District, Beijing 100085
People’s Republic of China
Tel: +86-10-5693-1800
Fax: +86-10-5693-1800
E-mail: ir@sinovac.com
(Name, Address and Telephone Number of Person
Authorized to Receive
Notices and Communications on Behalf of the
Person Filing Statement)
Copies to:
Christopher R. Drewry, Esq.
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
United States
Tel: +1 312-876-7700
Benjamin Su, Esq.
Zheng Wang, Esq.
Latham & Watkins LLP
18th Floor, One Exchange Square
8 Connaught Place
Central, Hong Kong
+852 2912-2500
¨ Check
the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
INTRODUCTION
This Schedule 14D-9 relates
to the tender offer (the “Tender Offer”) by Alternative Liquidity Index LP (“Alternative Liquidity”) pursuant
to which Alternative Liquidity has offered to purchase, subject to certain terms and conditions, up to 10,000,000 common shares (“Shares”),
of Sinovac Biotech Ltd. (the “Company”), at a price of $0.03 per Share, in cash, less any applicable withholding taxes and
without interest (the “Offer Price”). The Tender Offer is on the terms and subject to the conditions set forth in the Offer
to Purchase (the “Offer to Purchase”) attached as Exhibit (a)(1) to the Tender Offer Statement on Schedule TO filed by Alternative
Liquidity with the United States Securities and Exchange Commission (the “SEC”) on August 25, 2023 (as amended from time to
time and together with the exhibits thereto, the “Schedule TO”).
As discussed below, the
board of directors of the Company (the “Board of Directors”) unanimously recommends that the Company’s shareholders
(the “Shareholders”) reject the Tender Offer and not tender their Shares for purchase pursuant to the Offer to Purchase.
| Item 1. |
Subject Company Information |
The name and the address of
the Company and telephone number of its principal executive offices is as follows:
Sinovac Biotech Ltd.
No. 39 Shangdi Xi Road
Haidian District, Beijing 100085
Phone Number: +86-10-8279-9800
The title of the class of
equity securities to which the Tender Offer relates is the Company’s common shares, $0.001 per share (“common shares”),
of which there were 99,638,043 common shares outstanding as of June 30, 2023.
| Item 2. |
Identity and Background of Filing Person |
The Company is the person
filing this Schedule 14D-9. The Company’s name, address and business telephone number are set forth in Item 1 above, which information
is incorporated herein by reference.
This Schedule 14D-9 relates
to the Tender Offer by Alternative Liquidity pursuant to which Alternative Liquidity has offered to purchase, subject to certain terms
and conditions, up to 10,000,000 Shares at the Offer Price. The Tender Offer is on the terms and subject to the conditions set forth in
the Offer to Purchase attached as Exhibit (a)(1) to the Tender Offer Statement on Schedule TO.
According to the Schedule
TO, unless the Tender Offer is extended by Alternative Liquidity, it will expire on September 29, 2023, at 11:59 p.m., New York City time
(the “Expiration Date”). According to the Schedule TO, its business address and telephone number is: 11500 Wayzata Blvd. #1050,
Minnetonka, MN 55305; telephone number: (888) 884-8796
| Item 3. |
Past Contacts, Transactions, Negotiations and Agreements |
To the knowledge of the Company,
as of the date of this Schedule 14D-9, there are no material agreements, arrangements or understandings or any actual or potential conflicts
of interest between the Company or its affiliates and Alternative Liquidity and its executive officers, directors or affiliates.
| Item 4. |
The Solicitation or Recommendation |
(a) Solicitation or Recommendation
The Board of Directors
has thoroughly and carefully reviewed and analyzed the terms of the Tender Offer. Based on its review, the Board of Directors has
determined that the Tender Offer is not advisable and is not in the best interests of the Company or its Shareholders. Accordingly,
the Board of Directors recommends that the Shareholders reject the Tender Offer and not tender their Shares for purchase pursuant to
the Offer to Purchase.
The Board of Directors acknowledges
that each Shareholder must evaluate whether to tender its Shares to Alternative Liquidity pursuant to the Tender Offer and that because
there is no trading market for the Shares, a Shareholder may determine to tender based on, among other considerations, its individual
liquidity needs. In addition, the Board of Directors believes that in making a decision as to whether to tender its Shares to Alternative
Liquidity pursuant to the Tender Offer, each Shareholder should keep in mind that the Board of Directors makes no assurances with respect
to the timing of or ability to provide liquidity to the Shareholders or the future value of the Shares.
(b) Reasons for the Recommendation
The Board of Directors took
into account the following information in evaluating the merits of the Tender Offer and in support of its recommendation that the Shareholders
reject the Tender Offer and not tender their Shares in the Tender Offer:
| 1. | The Company believes the implied valuation based on the Offer Price is less than the value of the Company’s
assets. The Board of Directors believes that the Company has strong cash reserves and short-term investments. As of June 30, 2023, cash
and cash equivalents and restricted cash totaled $1.6 billion. This amount of cash and cash equivalents represents approximately $14.40
per share, based on the number of common shares and series B convertible preferred shares outstanding as of June 30, 2023. In addition,
as of June 30, 2023, the Company’s short term investments totaled $9.4 billion. The Company also posted $14.0 million of net income
attributable to common shareholders, or $0.14 per basic and $0.15 per diluted share, in the six-month period ended June 30, 2023. |
| 2. | Alternative Liquidity acknowledges that it does not have any accurate means for determining the present
value of the Company’s Shares. Alternative Liquidity further states that it determined the Offer Price by analyzing “a number
of quantitative and qualitative factors.” Alternative Liquidity further states that it “has not performed or commissioned
any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion
respecting the value of the Shares.” The Board of Directors believes this illustrates the lack of credibility of Alternative Liquidity’s
valuation methods and the inadequacy of the Offer Price. |
| 3. | Alternative Liquidity further states that “Shareholders who tender their Shares will give up the
opportunity to participate in any future benefits from the ownership of Shares, including potential future dividends by the Company from
operations or dispositions, and the Purchase Price per Share payable to a tendering Shareholder by the Purchaser may be less than the
total amount which might otherwise be received by the Shareholder with respect to the Shares from the Company.” In addition to the
aggregate total of $11.0 billion of cash and short-term investments, the Company’s principal business objective remains providing
attractive risk-adjusted returns to its Shareholders through the sale of a combination of the Company’s diversified vaccines/biomedical
products and potential long-term appreciation in the value of the Company through its R&D efforts in vaccines/biomedical products. |
| 4. | Alternative Liquidity has made similar unsolicited partial tender
offers for the stock of other public companies. |
| 5. | Given the Offer Price, the Board of Directors believes that the
Tender Offer represents an opportunistic attempt by Alternative Liquidity to make a profit
by purchasing the Shares at a very low price relative to their value, thereby depriving the Shareholders who tender Shares in the Tender
Offer of the potential opportunity to realize the full long-term value of their investment in the Company. The Board of Directors’
belief in this regard is supported by Alternative Liquidity’s own characterization
of the Tender Offer. Specifically, the Board of Directors notes the following statement in the Schedule TO: “The Purchaser is making
the Offer for investment purposes and with the intention of making a profit from the ownership of the Shares.” |
| 6. | In addition, the Board of Directors notes that the Tender Offer can be amended for various reasons. Accordingly,
the Board of Directors notes that there can be no assurance that the Tender Offer would be completed as soon as Alternative Liquidity
implies, or with the same terms and conditions, including without limitation, the Offer Price. Finally, Shareholders’ tenders of
Shares pursuant to the Tender Offer are irrevocable and may only be withdrawn prior to the Expiration Date, currently September 29, 2023,
by following the strict procedure described in the Offer to Purchase. |
In view of the number of reasons
and complexity of these matters, the Board of Directors did not find it practicable to, nor did it attempt to, quantify, rank or otherwise
assign relative weight to the specific reasons considered.
In the course of its deliberations,
the Board of Directors also considered the following material risks and other countervailing factors related to the Tender Offer that
previously had been identified and discussed by the Company’s management and its Board of Directors:
| 1. | Trading of the Company’s common shares on NASDAQ has been halted since February 22, 2019 in order
to facilitate the orderly distribution of the exchange shares pursuant to the rights agreement (the “Rights Agreement”), and
in light of the ongoing litigation concerning the Rights Agreement, there can be no assurance when or if this halt will be lifted; |
| 2. | the ongoing litigation concerning the exchange of shares and the Rights Agreement could have a material
adverse effect on the results of the Company’s operations and our financial condition; and |
| 3. | the Company has not been able to hold an annual meeting of shareholders since February 2018 due to the
ongoing litigation concerning the exchange of shares and the Rights Agreement, and may not be able to hold an annual meeting of shareholders
before the final determination of such litigation. |
The foregoing discussion of
the information and factors considered by the Board of Directors in reaching its conclusions and recommendations is not exhaustive, but
rather includes the material reasons and factors considered by the Board of Directors. In light of the wide variety of reasons and factors
considered above, the Board of Directors has determined that the Tender Offer is not advisable and is not in the best interests of the
Company or the Shareholders.
(c) Intent to Tender
The Company’s directors
and executive officers are entitled to participate in the Tender Offer on the same basis as other Shareholders. However, after reasonable
inquiry and to the best knowledge of the Company, none of the directors or executive officers of the Company intends to tender or sell
Shares held of record or beneficially by such person for purchase pursuant to the Tender Offer.
| Item 5. |
Person/Assets Retained, Employed, Compensated or Used |
Neither the Company nor any
person acting on its behalf has employed, retained or agreed to compensate any person to make solicitations or recommendations to Shareholders
concerning the Tender Offer.
| Item 6. |
Interest in Securities of the Subject Company |
During the 60 days prior to
the filing of this Schedule 14D-9, no transactions with respect to the common shares have been effected by the Company or, to the Company’s
best knowledge, by any of its affiliates or subsidiaries or by the directors or executive officers of the Company.
| Item 7. |
Purposes of the Transaction and Plans or Proposals |
The Company has not
undertaken and is not engaged in any negotiations in response to the Tender Offer that relate to (i) a tender offer or other
acquisition of the Company’s securities by the Company, any of its subsidiaries or any other person, (ii) an extraordinary
transaction, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries, (iii) a purchase,
sale or transfer of a material amount of assets of the Company or any of its subsidiaries or (iv) any material change in the present
distribution policy, or indebtedness or capitalization of the Company.
Additionally, there is no
transaction, Board of Directors’ resolution, agreement in principle or signed contract in response to the Tender Offer that relates
to or would result in one or more of the foregoing matters.
| Item 8. |
Additional Information |
Forward-Looking Statements
This Schedule 14D-9 contains
“forward-looking statements” within the meaning of the federal securities laws that involve risks and uncertainties, many
of which are beyond the Company’s control. The Company’s actual results could differ materially and adversely from those anticipated
in such forward-looking statements as a result of certain factors, including those set forth in this Schedule 14D-9. Forward-looking statements
are statements other than historical facts that relate to matters such as our industry, business strategy, goals and expectations concerning
our market position, future operations, margins, profitability, capital expenditures, financial condition, liquidity, capital resources,
cash flows, results of operations and other financial and operating information. When used in this Schedule 14D-9, the words “will,”
“may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,”
“should,” “project,” “plan,” or the negative of these words, variations thereof or similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Shareholders
are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties.
For example, our forward-looking statements include statements regarding Alternative Liquidity’s Tender Offer. Factors that could
cause or contribute to such differences include, but are not limited to risks inherent with tender offers; the occurrence of any event,
change or other circumstances that could make the Tender Offer impracticable; risks related to disruption of management time from ongoing
business operations due to the Tender Offer; unexpected costs, charges or expenses resulting from the Tender Offer; and litigation or
claims relating to the Tender Offer. Factors and risks that could cause actual results to differ materially from expectations are disclosed
from time to time in greater detail in the Company’s filings with the SEC including, but not limited to, the Company’s Annual
Report on Form 20-F filed with the SEC on May 1, 2023, its press release in relation to its unaudited first half of 2023 financial results
on Form 6-K filed with the SEC on August 15, 2023 and the Company’s future filings. The Company cautions that you should not place
undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this Schedule 14D-9 speaks
only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether
as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
* Incorporated by reference as provided in Item 8 hereto.
SIGNATURE
After due inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this Schedule 14D-9 is true, complete and correct.
| Sinovac Biotech Ltd. |
|
| |
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| By: |
/s/ Nan Wang |
|
| |
Nan Wang |
|
| |
Chief Financial Officer |
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|
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| Date: |
September 5, 2023 |
|
Exhibit (a)(1)
Sinovac
Board of Directors Unanimously Rejects an Unsolicited Partial Tender Offer
Board
of Directors Unanimously Recommends Sinovac Shareholders NOT Tender Shares for purchase pursuant to the Offer to Purchase
BEIJING, China, September 5, 2023 /Business Wire/ -- Sinovac Biotech
Ltd. (NASDAQ: SVA) (“SINOVAC” or the “Company”), a leading provider of biopharmaceutical products in China, announced
today that its Board of Directors (the “Board of Directors”) unanimously determined that the partial tender offer (the “Tender
Offer”) by Alternative Liquidity Index LP (“Alternative Liquidity”) to acquire up to 10,000,000 common shares of Sinovac
(the “Shares”) for $0.03 per share in cash (the “Offer Price”) is NOT advisable and is NOT in the
best interests of the Company or its shareholders (“Shareholders”). Accordingly, the Board of Directors recommends that the
Shareholders reject the Tender Offer and not tender their Shares for purchase pursuant to the Offer to Purchase by Alternative Liquidity.
The Company has filed a Schedule
14D-9 with the United States Securities and Exchange Commission (the “SEC”) detailing the reasons for its rejection of Alternative
Liquidity’s Tender Offer.
The Tender Offer was reviewed
and considered by the Board of Directors, none of whom are affiliated with Alternative Liquidity. The Board of Directors took into account
various factors in evaluating the Tender Offer and in support of its recommendation that the Shareholders reject the Tender Offer and
not tender their shares in the Tender Offer, including the following.
| 1. | The
Company believes the implied valuation based on the Offer Price is less than the value of the Company’s assets. The Board of Directors
believes that the Company has strong cash reserves and short-term investments. As of June 30, 2023, cash and cash equivalents and restricted
cash totaled $1.6 billion. This amount of cash and cash equivalents represents approximately $14.40 per Share, based on the number of
common shares and series B convertible preferred shares outstanding as of June 30, 2023. In addition, as of June 30, 2023, the Company’s
short term investments totaled $9.4 billion. The Company also posted $14.0 million of net income attributable to common shareholders,
or $0.14 per basic and $0.15 per diluted share, in the six-month period ended June 30, 2023. |
| | | |
| 2. | Alternative
Liquidity acknowledges that it does not have any accurate means for determining the present value of the Company’s shares. Alternative
Liquidity states that it “has not performed or commissioned any appraisal, or engaged any independent financial advisor or other
third party to perform any valuation analysis or provide any opinion respecting the value of the Shares.” The Board of Directors
believes this illustrates the lack of credibility of Alternative Liquidity’s valuation methods and the inadequacy of the Offer
Price. |
| | | |
| 3. | Alternative
Liquidity further states that “Shareholders who tender their Shares will give up the opportunity to participate in any future benefits
from the ownership of Shares, including potential future dividends by the Company from operations or dispositions, and the Purchase Price
per Share payable to a tendering Shareholder by the Purchaser may be less than the total amount which might otherwise be received by
the Shareholder with respect
to the Shares from the Company.” In addition to the aggregate total of $11.0 billion of cash and short-term investments, the Company’s
principal business objective remains providing attractive risk-adjusted returns to its Shareholders through the sale of a combination
of the Company’s diversified vaccines/biomedical products and potential long-term appreciation in the value of the Company through
its R&D efforts in vaccines/biomedical products. |
| 4. | Alternative
Liquidity has made similar unsolicited partial tender offers for the stock of other public companies. |
| | | |
| 5. | Given
the Offer Price, the Board of Directors believes that the Tender Offer represents an opportunistic attempt by Alternative Liquidity to
make a profit by purchasing the Shares at a very low price relative to their value, thereby depriving the shareholders who tender Shares
in the Tender Offer of the potential opportunity to realize the full long-term value of their investment in the Company. The Board of
Directors’ belief in this regard is supported by Alternative Liquidity’s own characterization of the Tender Offer. Specifically,
the Board of Directors notes the following statement in the Tender Offer Statement on Schedule TO: “The Purchaser is making the
Offer for investment purposes and with the intention of making a profit from the ownership of the Shares.” |
| | | |
| 6. | In
addition, the Board of Directors notes that the Tender Offer can be amended for various reasons. Accordingly, the Board of Directors
notes that there can be no assurance that the Tender Offer would be completed as soon as Alternative Liquidity implies, or with the same
terms and conditions, including without limitation, the Offer Price. Finally, Shareholders’ tenders of Shares pursuant to the Tender
Offer are irrevocable and may only be withdrawn prior to the Expiration Date, currently September 29, 2023, by following the strict procedure
described in the Offer to Purchase. |
In view of the number of reasons
and complexity of these matters, the Board of Directors did not find it practicable to, nor did it attempt to, quantify, rank or otherwise
assign relative weight to the specific reasons considered.
In the course of its deliberations,
the Board of Directors also considered the following material risks and other countervailing factors related to the Tender Offer that
previously had been identified and discussed by the Company’s management and its Board of Directors:
| 1. | Trading
of the Company’s common shares on NASDAQ has been halted since February 22, 2019 in order to facilitate the orderly distribution
of the exchange shares pursuant to the rights agreement (the “Rights Agreement”), and in light of the ongoing litigation
concerning the Rights Agreement, there can be no assurance when or if this halt will be lifted; |
| | | |
| 2. | the
ongoing litigation concerning the exchange of shares and the Rights Agreement could have a material adverse effect on the results of
the Company’s operations and our financial condition; and |
| | | |
| 3. | the
Company has not been able to hold an annual meeting of shareholders since February 2018 due to the ongoing litigation concerning the
exchange of shares and the Rights Agreement, and may not be able to hold an annual meeting of shareholders before the final determination
of such litigation. |
The foregoing discussion of
the information and factors considered by the Board of Directors in reaching its conclusions and recommendations is not exhaustive, but
rather includes the material reasons and factors considered by the Board of Directors. In light of the wide variety of reasons and factors
considered above, the Board of Directors has determined that the Tender Offer is not advisable and is not in the best interests of the
Company or the Shareholders.
Additional Information
The full basis for the Board’s unanimous
recommendation is set forth in Sinovac’ Schedule 14D-9 filed on September 5, 2023 with the SEC and is available on the SEC’s
website at www.sec.gov. Copies of the Schedule 14D-9 may also be obtained on the Company’s website at www.sinovac.com
or by contacting Helen Yang at +86-10-8279 9720 or via email at ir@sinovac.com.
About
SINOVAC
Sinovac
Biotech Ltd. (SINOVAC) is a China-based biopharmaceutical company that focuses on the R&D, manufacturing, and commercialization of
biomedical products that protect against human infectious diseases.
SINOVAC’s
product portfolio includes vaccines against COVID-19, enterovirus 71 (EV71) infected hand-foot-mouth disease (HFMD), hepatitis A, varicella,
influenza, poliomyelitis, pneumococcal disease, mumps, etc.
The COVID-19
vaccine, CoronaVac®, has been approved for use in more than 60 countries and regions worldwide. The hepatitis A vaccine,
Healive®, passed WHO prequalification requirements in 2017. The EV71 vaccine, Inlive®, is an innovative
vaccine under "Category 1 Preventative Biological Products" and commercialized in China in 2016. In 2022, SINOVAC’s Sabin-strain
inactivated polio vaccine (sIPV) and varicella vaccine were prequalified by the WHO.
SINOVAC
was the first company to be granted approval for its H1N1 influenza vaccine Panflu.1®, which has supplied the Chinese government's
vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine, Panflu®,
to the Chinese government stockpiling program.
SINOVAC
continually dedicates itself to pipeline development including but not limited to new technology, new vaccines as well as other biomedical
products. We will constantly explore global opportunities of strategic expansion.
For more information, please visit the Company’s
website at www.sinovac.com.
Forward-Looking
Statements
This communication contains
“forward-looking statements” within the meaning of the federal securities laws that involve risks and uncertainties,
many of which are beyond the Company’s control. The Company’s actual results could differ materially and adversely from
those anticipated in such forward-looking statements as a result of certain factors, including those set forth in this
communication. Forward-looking statements are statements other than historical facts that relate to matters such as our industry,
business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital
expenditures, financial condition, liquidity, capital resources, cash flows, results of operations and other financial and operating
information. When used in this communication, the words “may,” “might,” “will,”
“would,” “future,” “plan,” “believe,” or
the negative of these words, variations thereof or similar expressions are intended to identify forward-looking statements, although
not all forward-looking statements contain such identifying words. For example, our forward-looking statements include statements
regarding Alternative Liquidity’s Tender Offer. Factors that could cause or contribute to such differences include, but are
not limited to risks inherent with tender offers; the occurrence of any event, change or other circumstances that could make the
Tender Offer impracticable; risks related to disruption of management time from ongoing business operations due to the Tender Offer;
unexpected costs, charges or expenses resulting from the Tender Offer; and litigation or claims relating to the Tender Offer.
Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater
detail in the Company’s filings with the SEC including, but not limited to, the Company’s Annual Report on Form 20-F
filed with the SEC on May 1, 2023, its press release in relation to its unaudited first half of 2023 financial results on Form 6-K
filed with the SEC on August 15, 2023 and the Company’s future filings. The Company cautions that you should not place undue
reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks
only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
Contact
Sinovac
Biotech Ltd.
Helen Yang
Tel: +86-10-8279
9720
Email: ir@sinovac.com
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