China’s Aging Trend Makes Trauson a Deal Target: Real M&A
By Natasha Khan and Angus Whitley - Oct 18, 2012
The race to help China’s 181 million elderly with artificial joints and implanted spinal supports is making targets of Trauson Holdings Co. (325) and a unit of Shandong Weigao Group Medical Polymer Co. (1066)
Medtronic Inc. (MDT), based in Minneapolis, last month announced the $755 million takeover of orthopedic implant maker China Kanghui Holdings Inc. in a nation where the senior population may more than double by 2050. That deal may spur a pursuit of rivals including Trauson, whose screws and scaffolds hold backs together, and Weigao’s orthopedic business that makes metal plates to stabilize bones, Barclays Plc said. Both companies are more profitable than at least 92 percent of similar-sized Asia-Pacific medical equipment and device makers, according to data compiled by Bloomberg.
Orthopedic implant sales in China will almost double to $2.7 billion by 2015, vaulting it past Japan as the biggest market after the U.S., Frost & Sullivan said. Even after Weigao stock rose 50 percent this year and Trauson leapt 110 percent as of yesterday, Oppenheimer & Co. says the companies are still attractive because of their potential to win business in provincial China. Buyers may be overseas rivals or Mindray Medical International Ltd. (MR), said Core Pacific-Yamaichi International (H.K.) Ltd. and Fortune CLSA Securities Ltd.
“China is where the growth is, and it has very few pure-play orthopedic companies,” Jason Mann, a Hong Kong-based health-care analyst at Barclays, said in a telephone interview.“Some people wonder whether Medtronic’s competitors will be forced to make an acquisition to stay in the game. Trauson is the obvious next partner in terms of an acquisition target.”
Trauson rose 2.7 percent to HK$3.79 in Hong Kong at the close of trading today, and Weigao climbed as much as 3.8 percent before closing up 0.2 percent at HK$10.50.
bloomberg.com |
