Suspended for half a year, Nanjing Cenbest finally finished its significant M&A activities with a total amount of approximately RMB 11 billion. On January 8, Nanjing Cenbest announced that it had finished the acquisition of all assets and businesses of China Cord Blood Corporation (referred to as CO Corporation) in China. It was announced that, after this transaction, Nanjing Cenbest will hold a majority in CO Corporation of 65.4%, and as for the other 34.6%, Nanjing Cenbest plans to wait for the completion of CO Corporation’s privatisation. The counterparty, Golden Meditech BVI, implemented a cash acquisition after obtaining a minority holding. The final acquisition price is expected to be valued at about RMB 7.5 billion.

In addition to the acquisition of CO, according to the announcement issued on January 9, Nanjing Cenbest will acquire a 76% equity in Shandong Qilu Stem Cell Engineering Co. Ltd. (namely, Shandong Cord Blood Bank) for a total of RMB 3.5 billion, and the final entity in possession of the other 24% equity is actually CO Corporation. This means that Nanjing Cenbest will have full control over Shandong Cord Blood Bank. These two acquisitions have actually put Nanjing Cenbest into the position of the “top listed company in the Chinese healthcare industry.”

According to public documents, CO Corporation had previously registered in the Cayman Islands and is listed in the USA, whose main business is the storage of cord blood hematopoietic stem cells. In addition, it is also the largest cord blood storage corporation in China, possessing the warehousing rights and operation rights as well as cord blood bank licences in Beijing, Guangdong, Zhejiang and Shandong. The banks in Beijing and Guangdong are the only two cord blood banks which are authorised by the American Association of Blood Banks (AABB). After the transaction, CO Corporation will delist from the NYSE, becoming a private and fully-owned subsidiary of Nanjing Cenbest.

Not long ago, the National Health and Family Planning Commission issued the Notice on the Extension for the Planning the Establishment of Cord Blood Banks, expressing that the total of the current seven cord blood bank licenses will remain unchanged, with no increase in cord blood banks until 2020.

After the transactions of CO and Shandong Cord Blood Bank, Nanjing Cenbest will hold four licences out of the only seven issued provincial-level cord blood bank licences in China currently. It’s learned that, as of December 31, 2015, these four cord blood banks in Beijing, Guangdong, Zhejiang and Shandong have reserved about 700,000 cord blood samples at home. And if adding up Cordlife reserves across the seven countries around where CO Corporation has made strategic investments, there are about one million cord blood samples in its associated reserves. Thus it considerably exceeds the 500,000 amount of cord blood samples in the original largest cord blood bank in the world, namely, the American Cord Blood Registry (CBR), emerging as the world's largest cord blood corporation. We might say that Nanjing Cenbest has obtained a decisive opportunity in the cord blood field and relevant business areas.

Along with the progress of biomedicine, genetic engineering and other scientific and technological means, the personalized medicine and preventive medicine, represented by stem cell treatment, genetic testing and early cancer screening, will become the new driving force for the growth of the healthcare industry. The clinical applications of umbilical cord blood stem cells are at their most mature. Taking diabetes as an example, there are currently over 110 million people suffering from diabetes in our country. If the treatment rate is 1/10,000 and RMB 300,000 per case, then the market for diabetes stem cell treatment could be worth RMB 3.3 billion. According to the introduction of relevant professionals, the whole industry chain around cord blood hematopoietic stem cells has a relatively wide range of business opportunities: the upstream mainly includes the collection and storage of cord blood, the midstream is centred on clinical development and the downstream involves clinical applications, such as hematopoietic stem cell treatment, the application of medical cosmetology and anti-aging technology, which can also extend its business in terms of genetic testing and precision medicine.

Insiders believe that this transaction is a win-win for both Nanjing Cenbest and CO Corporation. From the perspective of Nanjing Cenbest, it enters the biotherapeutic field though the acquisition of CO Corporation, and it also joins in the senior care service field. Therefore, it will formally unveil its plan, forming a “twin engine” of general merchandise retail and senior care health industries. CO Corporation will delist from the NYSE, gradually converting from foreign investment into domestic investment. Thus, it won't be restricted by access policies, extending its business in terms of genetic testing and precision medicine, which means broader market prospects. After the acquisition of CO Corporation, Nanjing Cenbest will coordinate with the Chinese biotherapeutic field and introduce more advanced technologies and innovation management so as to provide new ideas and new energy into its economic growth, which conforms to the national trend of supply-side reform.

As the listing platform of Sanpower Group’s health sector and business sector, Nanjing Cenbest has huge potential. In addition, its real estate business is highly profitable. Liu Zhangming, analyst of Essence Securities, believes, “Nanjing Cenbest will become the sole homecare service company among all Chinese listed companies, which is distinctly different from the business models of other corporations engaging in the senior care industry and has tremendous space for growth in the future. As for the cord blood bank business, their models are both mature and advanced, and its scale will be the largest all over the world, which also has great room for development. Based on the above analyses, the market value of Nanjing Cenbest will be more than RMB 150 billion.”

As the listing platform of Sanpower Group’s health sector and business sector, Nanjing Cenbest has huge potential. In addition, its real estate business is highly profitable. Liu Zhangming, analyst of Essence Securities, believes, “Nanjing Cenbest will become the sole homecare service company among all Chinese listed companies, which is distinctly different from the business models of other corporations engaging in the senior care industry and has tremendous space for growth in the future. As for the cord blood bank business, their models are both mature and advanced, and its scale will be the largest all over the world, which also has great room for development. Based on the above analyses, the market value of Nanjing Cenbest will be more than RMB 150 billion.”