China Everbright Group is selling its sole listed healthcare unit, Cachet Pharmaceutical Co. Ltd., for approximately 1.5 billion yuan ($222 million) to Beijing Tongrentang (Group) Co. Ltd. This move follows years of declining earnings and increasing scrutiny from China's anti-corruption campaign in the medical sector.
The sale highlights the significant pressures facing China's healthcare sector, including financial performance challenges and regulatory crackdowns, prompting major state-owned enterprises like Everbright to divest assets.
China Everbright Group has agreed to sell its entire 28.48% stake in Cachet Pharmaceutical Co. Ltd., its only listed healthcare and eldercare unit, to Beijing Tongrentang (Group) Co. Ltd. for approximately 1.5 billion yuan ($222 million). This divestment marks the end of years of financial strain for Cachet, characterized by weakening earnings and unresolved tax issues. The move also comes amid China's intensified anti-corruption campaign targeting the medical sector, which has increased scrutiny on companies like Cachet. Following the transaction's closure, Tongrentang, a company supported by the Beijing municipal government, will assume controlling shareholder status of the Shenzhen-listed medical distributor.
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