Sinovac Biotech Ltd. Stock Surged Amid 'Hostile Takeover'

Shares of Sinovac Biotech Ltd. (NASDAQ: SVA) were trading up more than 13 percent in Thursday's pre-market session after the company announced it received a non-binding proposal letter from a consortium of investors to acquire the company for $7.00 per share.

The consortium includes PKU V-Ming (Shanghai) Investment Holdings Co., Ltd., Shandong Sinobioway Biomedicine Co., Ltd., CICC Qianhai Development (Shenzhen) Fund Management Co., Ltd., Beijing Sinobioway Group Co., Ltd., Heng Feng Investments (International) Limited and Fuerde Global Investment Limited.

Peter Halesworth is the Managing Partner of Heng Ren Investments. Speaking to Benzinga, Halesworth said that Sinovac is a "coveted stock" because its EV-71 vaccince has a "massive" target market in China. He pointed out that the 1- to 5-year-old population in China is approximately 80 million and there are 17 million newborns per year. In addition, the company can expand its market to Southeast Asia where HFMD is endemic and can be fatal for children.

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"EV-71 is transformational for Sinovac and its shareholders," Halesworth continued. "The initial production is eventually 20 million doses. There are estimates by vaccine experts EV-71 pricing could be $10.00 - $25.00 per dose, and in high-risk situations $50.00 - $75.00. Either of those scenarios - $200 million to $1.0 billion - would dwarf Sinovac's current revenues."

Halesworth further argued "this is the payoff moment that U.S. shareholders have been waiting for very patiently."

"The compensation for this patience, and the control premium the buyer should pay shareholders to exclusively enjoy the huge surge in revenue generated by EV-71, needs to be much higher," the fund manager concluded.

Shares began selling off and traded recently at $6.49, up 1 percent.