The novel coronavirus outbreak will spur a blistering pace of mergers and acquisitions in sectors such as healthcare in no time, as the virus is dragging down the valuation of potential target companies at a fresh low level, says an executive at Chinese conglomerate Fosun International.
Consolidation in the healthcare industry is expected to be a major theme for the post-coronavirus period, reminiscent of the merger spree in the years after the 2008 global financial crisis, when blockbuster deals included Pfizer acquiring its rival Wyeth for $68 billion and Roche paying $46.8 billion to gain full ownership of Genentech, Chen Qiyu, co-chief executive of Fosun International and chairman of Fosun Pharma, told an online media briefing on Wednesday.
The novel coronavirus rampaging across the globe not only poses a challenge, but also spells potentially huge opportunities for every single company. It forces companies to step out of their comfort zones
chairman of Fosun International
The group posted a 10 percent increase in net profit to 14.8 billion yuan ($2.1 billion) for the 12 months ended December 2019, putting it on a winning streak for the eighth straight year.
Revenue surged 31 percent year-on-year to a record high of 142.98 billion yuan. The Shanghai-based firm will distribute a final dividend of 27 HK cents per share, taking the full-year dividend to 40 HK cents per share.
As China implemented sweeping containment measures to keep the spread of the coronavirus under control in two months, the country is making good efforts to restart the economy.
Although nationwide economic losses are inevitable, Fosun has seen an uptick in consumer demand as life gradually returns to normal in the country.
The occupancy rate at the group’s Atlantis Sanya luxury resort on the southern island province of Hainan hit 60 percent in the last week of March, compared with the same period last year. Business at direct-sale stores of its unit Yuyuan Tourist Mart has returned to 70 percent.
With the foresight to invest in up-and-coming target companies overseas, Fosun has beefed up its presence worldwide, Chen said. Riding high on the normalization of operations in China, he said, Fosun aims to seek potential target companies globally in no time.
“The novel coronavirus rampaging across the globe not only poses a challenge, but also spells potentially huge opportunities for every single company. It forces companies to step out of their comfort zones,” said Fosun International Chairman Guo Guangchang, who founded the company with four other partners in 1992.
The outbreak presents a big test for multinational conglomerates like Fosun to mobilize, organize and deploy their resources across continents, he said.
From humble beginnings in pharmaceuticals and property development, the conglomerate has built up a global business empire spanning diverse fields, including pharmaceuticals and healthcare, tourism, culture and fashion, as well as insurance and financial services.
Fosun’s share price slipped 2.46 percent to HK$8.74 in Hong Kong on Wednesday, while the benchmark Hang Seng Index sagged 2.19 percent, or 517.69 points, to close at 23,085.79.
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