LIFETECH SCI (01302) saw its shares drop more than 15%, declining 15.58% to HK$1.95 at the time of writing, with a turnover of HK$273 million.

On the evening of May 22, the company announced its intention to acquire approximately 96.46% of Huayi Shengjie, a domestic manufacturer of congenital heart defect occluders, from AUT-VII, a wholly-owned entity of Hillhouse Capital, for a consideration of about RMB 1.8733 billion. The entire consideration will be paid through the issuance of convertible bonds, and the parties have entered into a legally binding framework agreement.

According to the announcement, the convertible bonds will bear an annual interest rate of 3.5%, payable in cash quarterly over a three-year term. The initial conversion price is set at HK$2.50 per share, representing an approximate 8.2% premium over the closing price of HK$2.31 on May 22. Full exercise of the bonds would involve the issuance of about 860 million new shares, accounting for approximately 15.66% of the enlarged share capital. This transaction would make Hillhouse the single largest shareholder of LIFETECH SCI.

Huayi Shengjie primarily engages in the research, development, manufacturing, and sale of vascular interventional medical devices. Its products are mainly used for treating congenital heart defects and preventing cardiogenic embolic strokes. The company launched one of China's first domestically produced congenital heart defect occluders in 2003 and introduced China's first patent foramen ovale (PFO) occluder product in 2009.