BGI overcomes hostile bid to make milestone public company purchase


China’s growing appetite for overseas high-tech was showcased in the first acquisition of a US public company by a Chinese corporation, a lawyer involved in the deal said.

But not without a fight. Wendy Pan, a Shanghai-based partner at O’Melveny & Myers, told China Business Law Journal the deal had to clear bureaucratic hurdles from both countries and overcome an aggressive bid from a rival company to succeed.

story_1_picChinese genomics company BGI-Shenzhen acquired the Nasdaq-listed Complete Genomics through a cash tender offer, followed by a short-form merger that became effective on 18 March. O’Melveny & Myers acted for BGI. The O’Melveny team was led by Pan and the firm’s Silicon Valley-based partner Paul Scrivano.

Pan said that while the deal was awaiting regulatory approval “another strategic investor that had previously engaged in discussions with Complete suddenly launched a competing public offer and sought to cast the BGI bid in an unfavourable light, suggesting that a Chinese company could not obtain the necessary approvals and that the acquisition by BGI, a Chinese company, would be bad for national security”.

Wendy Pan

She said the O’Melveny team, along with BGI’s internal team, acted quickly to prepare a response, assure Complete’s management and board, and counter the narrative made by the competing bidder.

“The fact that BGI, a young company with no prior M&A or similar deal experience, let alone overseas public company M&A experience, could overcome all sorts of challenges and successfully close the deal sends a very encouraging message,” Pan continued.

“If a company is properly prepared for the challenges, puts in place a good internal deal team to manage the process, and has experienced international advisers, similar cross-border M&A deals can be consummated.”

The deal had other hurdles to overcome. Antitrust approval and clearance by the Committee on Foreign Investment in the United States were required. In China, the deal had to be approved by National Development and Reform Commission, Ministry of Commerce and State Administration of Foreign Exchange.

Pan said the success of the deal “definitely signals a trend of Chinese companies’ growing interest in technology-focused acquisitions”.

She also pointed to a trend in the growing number of Chinese companies that are looking to acquire overseas technologies, “whether [in] cutting-edge new technologies and products in areas such as genomics, clean-tech, alternative energy, or complementary technologies and manufacturing technologies in traditional industries that are not currently available in China”.