Chinese pharma buys $45m stake in Paragon Care; shares jump 11pc
Health & Biotech
China Pioneer, a $415 million Hong Kong-listed healthcare group, has invested $45.2 million in Aussie medical supplier Paragon Care.
The shares (ASX:PGC) jumped 11 per cent to an intrady high of 86c. They’ve traded between 69c and 94c over the past year.
The deal is the latest sign that the ASX health sector is experiencing a period of strong investment and consolidation after several years of inactivity.
The recent Sirtex takeover deal — worth a mouth-watering $1.9 billion — resulted in a Chinese buyer eclipsing an earlier $1.6 billion offer from a US outfit, Varian.
PGC told the market this morning it had secured a strategic investment from China Pioneer, which will now hold 15 per cent of the company.
China Pioneer is a distributor of medical devices, equipment and pharmaceutical products throughout mainland China; the investment broadens the reach of Paragon Care, which sells medical devices and consumables to healthcare providers in Australia and New Zealand.
Shane Tanner, Paragon’s chairman, told investors the investment was testament to the company’s reputation in the healthcare sector.
“It represents a pleasing validation of PGC’s strategy of building a sustainable growth platform to take advantage of structural and demographic tailwinds underpinning the Australian and New Zealand health care sectors,” he said.
“We look forward to exploring with China Pioneer the opportunities that may open up for both companies as a result of this investment.
China Pioneer chairman Paul Li said it was the company’s first investment in the Oceania region.
“It is a great privilege for us to become a shareholder in Paragon Care. We are impressed by what they have achieved over the past nine years and are excited by the potential cross-selling benefits for both companies,” he said.
The placement will see 50.4 million PGC shares issued to China Pioneer at 91c a pop.
Paragon told investors it intended to use the investment to fund two acquisitions in Australian and New Zealand — the latest in a long line of businesses Paragon has snapped up over the past year.
Paragon has not disclosed which businesses it is looking at acquiring, but said in a statement to the ASX this morning discussions were at “advanced stages” and aimed at “expanding geographic presence into previously under-serviced regions”, namely Queensland and New Zealand.
Paragon also today reported improved full-year results.
Revenue was up 17 per cent year-on-year to $136 million, profit up 8 per cent to nearly $11 million and a full-year dividend of 3.1c.