Deals – March 2008

MBK bids S$360m for pharmaceutical company * KKR signs second Indian deal * Baring Asia takes stake in medical deal * TPG, Sumitomo go hostile with semiconductor bid * Morgan chosen as top Daewoo bidder * Carlyle spends $136m on senior housing in Japan * Chinese advertising firm in record $83m financing round

MBK bids S$360m for pharmaceutical company
MBK Partners has made a S$357.4 million ($252 milllion) bid to delist Singapore pharmaceutical company AsiaPharm, which researches, develops and produces pharmaceutical drugs, in order to merge it with portfolio company Luye Pharmaceutical International.

The firm, which is run by Michael Kim, has bid at S$0.73 per share. The company’s share price rose more than 10 percent to S$0.7 per share following the bid. The offer is a 31.1 percent premium to the company’s share price in the month preceding the bid.

MBK said it had received irrevocable undertakings from shareholders with a 44.17 percent stake. It is seeking to delist the company from the Singapore Stock Exchange.

ABN AMRO is advising MBK.

KKR signs second Indian deal
Nearly two years after its first Indian investment, Kohlberg Kravis Roberts has agreed its second deal in the country: a $250 million (€170 million) minority investment in Bharti Infratel. The investment will be made from the firm’s Asia fund as well as its global buyout fund.

KKR’s Bharti stake will reportedly be in the range of 2 percent to 2.5 percent and will be determined after the New Delhi-based telecom operator’s valuation is established following the company’s 2008-2009 operating performance. That valuation is estimated to be between $10 billion and $12.5 billion, the firm said.

The deal is Bharti’s second private placement. In December 2007, it raised $1 billion from Temasek Holdings, The Investment Corporation of Dubai, Goldman Sachs, the Macquarie Group, AIF Capital, Citigroup and India Equity Partners.

KKR’s first investment in India, the $900 million acquisition of a majority stake in Nasdaq-listed Flextronics Software Systems, made headlines at the time for being the largest leveraged buyout and technology investment in India to date.

Baring Asia takes stake in medical deal
Hong Kong-based mid-cap investor Baring Asia has agreed to acquire a minority interest in Amsino Medical, a medical device manufacturer based in Pomona, California and production and facilities in the US and Asia. Jean Eric Salata, CEO of Baring Asia, said: “There is a structural change taking place in the medical devices market, this is one of the last sectors to embrace outsourced manufacturing, and Amsino is well positioned to capture market share.” Amsino was set up in 1993 and is privately owned.

TPG, Sumitomo go hostile with semiconductor bid
Sumitomo Heavy Industries and TPG have gone public with their $544 million offer to purchase Axcelis following 18 months of failed attempts to negotiate a buyout of the semiconductor company.

The board of directors for Nasdaq-listed Axcelis Technologies, a semiconductor company, has curtly acknowledged a $544 million (€374 million) take-private offer from Japanese company Sumitomo Heavy Industries (SHI) and private equity firm TPG. Though SHI noted the $5.20 per share offer represents a 28 percent premium over Axcelis’ 8 February closing share price, Axcelis countered that the offer was nearly 10 percent less than the stock’s average closing price in the 52 weeks preceeding it.

The buyout offer, in which TPG is “a minority partner and financing source”, according to SHI, was initially made on 4 February via an unsolicited letter. But SHI said the company’s board “declined to engage in meaningful discussions”, while Axcelis said it told the potential buyers it would discuss the proposal with advisors and react accordingly. “Instead, the Japanese company chose to not wait for Axcelis to respond and made public its letter”, Axcelis said.

Meanwhile, the potential buyers say they have effectively been waiting for Axcelis to engage in discussions with them for the past 18 months.

TPG declined comment.

Morgan chosen as top Daewoo bidder
Morgan Stanley Private Equity has reportedly been selected as the preferred bidder for South Korea’s Daewoo Electronics, just months after closing a $1.5 billion Asia fund. The company’s main creditor, Woori Bank, Morgan Stanley had emerged as the top bidder from an auction process commenced in November, Bloomberg reported. Following Morgan Stanley’s due diligence, a final agreement was expected to be signed in May, Woori said. The statement did not contain financial terms or names of other bidding groups.

A Morgan Stanley spokeswoman declined to comment.

Korean media described the other bidders as foreign financial firms and noted that they included New York private equity firm Ripplewood Holdings as a direct bidder, Reuters reported. Ripplewood had in late 2006 been selected to purchase Daewoo via its Indian portfolio company Videocon Industries, but the deal later fell apart due to price discrepancies. That deal was estimated to be in the range of $740 million.

This is not the first time Morgan Stanley has won a Daewoo auction: last year its REIT purchased the headquarters of Daewoo Engineering & Construction in Seoul for $1 billion, setting a record for Korean real estate deals.

Carlyle spends $136m on senior housing in Japan
The Carlyle Group has acquired the land and buildings of the Bon Sejour Grand facilities, resident-paid nursing homes, for ¥14.6 billion ($136 million, €92 million) from the Goodwill Group. The investment was made by Carlyle Asia Real Estate Partners.

The facilities, all located in central Tokyo, comprise a total of 346 units at four residences. They include Bon Sejour Grand Suginami Miyamae (Suginami Ward), Bon Sejour Grand Nanpeidai (Shibuya Ward), Bon Sejour Grand Sakura Shinmachi (Setagaya Ward), and Bon Sejour Grand Yoga-no-Mori (Setagaya Ward).

Carlyle has been actively seeking out opportunities in the senior living sector in Japan, targeting the country’s aging demographic. In September 2007 the firm acquired senior living facility Hyldemoer Sankei-en in Japan. Japan has been experiencing net population loss, due to falling birth rates and almost no net immigration. Because of a baby boom that occurred in the first half of the 20th century it also has a significant aging population, along with one of the highest life expectancies in the world at 81.3 years. Over 21 percent of the country’s population is now 65 or over, the highest in the world.

Chinese advertising firm in record $83m financing round
Skyflying Media has concluded an $83 million financing round. The transaction is being billed as the largest ever private equity financing in China’s outdoor advertising sector and further underlines that Asian venture deals may not resemble traditional seed-stage investments in Western markets. The round included investments from Goldman Sachs, New Horizon Capital, Farallon Capital and Sequoia China, all of whom were characterised in a statement as “Series A” investors in this “strategic equity” round.

Jonathan Zhang, Skyflying’s chief financial officer, said the calibre of its backers give credence to the company’s strategy and growth potential. Skyflying was founded in 2006 and is China’s largest outdoor advertising company with an established presence in transport and railway hubs in cities including Beijing, Guangzhou and Shenzhen.