Wandong Medical Confirms €232.1M Acquisition of Esaote with Alibaba's Jack Ma-Backed Yunfeng Fund

VCBeat (WeChat ID: vcbeat) has learned that on April 19, 2018, Wandong Medical released its latest announcement, declaring that the M&A fund in which the company participated as an investor wouldShanghai Luzi Enterprise Management Consulting Center (Limited Partnership), completed the acquisition of Italy’s Esaote Group on April 18, with the final actual transaction amount being€232.1 million(approximately RMB 1.803 billion).

Following the completion of this acquisition, Mr. Wu Guangming, Chairman of Wandong Medical, will assume the role of Chairman of the Board of Esaote Group, while Mr. Xie Yufeng, General Manager, will serve as a Director.

December 7, 2017Wandong Medical, Yunfeng Capital, Tianyi, Yuwell, Shanghai Free Trade Zone Fund, KangdaFive medical enterprises and institutions, forming the “China’s Strongest Medical Investment Consortium,” plan to acquire Italy’s top medical equipment manufacturer, Esaote Group, for €248 million (approximately RMB 1.937 billion).

Investment Consortium Membersand the capital contribution ratios of each investor

As soon as the news broke, it immediately sparked heated discussions across the entire medical device industry. Many are speculating: Why are Chinese healthcare companies banding together to acquire Esaote? What is their underlying strategy?

BaiSheng Medical Group is an internationally renowned multinational corporation specializing in high-end medical equipment. Established in 1983 and headquartered in Italy, the company operates manufacturing facilities and R&D centers in Italy and the Netherlands, with its business presence extending to more than 60 countries worldwide.

According to Yisheng Medical's 2016 annual report, the group's total assets reached €474 million last year, with full-year revenue of €270 million (approximately RMB 2.1 billion) and net profit of €5.2 million (approximately RMB 40.58 million).

The Group's core products include ultrasound medical imaging solutions and dedicated magnetic resonance imaging (MRI) systems.In the field of ultrasound imaging, Esaote has mastered core technologies across the entire industry chain, ranking sixth among the top ten global ultrasound equipment suppliers, and holding the largest market share in Italy and Spain.

In the specialized MRI niche market, Esaote is the undisputed global leader, holding a 30% market share and possessing over 180 patents in areas such as color Doppler ultrasound, ultrasound transducers, dedicated MRI systems, and medical imaging software.

In less than six months, the investment consortium completed the acquisition of Baisheng Medical.This signifies a profound transformation in the global ultrasound landscape.Coupled with favorable factors such as the release of pent-up demand in the Chinese market, product upgrades and replacements, and policy dividends,Domestic ultrasound systems will have the opportunity to directly challenge the mid-to-high-end market position held by GPS, thereby accelerating the completion of import substitution for ultrasound equipment in China.

Upon completion of this acquisition, the investment consortium will benefit from Yisheng Medical’s robust R&D capabilities in the medical imaging industry, its globally renowned brand, industry-leading products, and its mature overseas distribution and service network, thereby facilitating the global expansion of Chinese-made medical products.

Meanwhile, by leveraging the extensive distribution networks and procurement channels of Wandong Medical, Yuyue Technology, and Meinian Onehealth, the investment consortium can also help Esaote expand its penetration in China’s medical device market, achieving mutual benefit and win-win outcomes.

Regarding this acquisition,Karl-Heinz Lumpi, CEO of Besheng Medicalstated: “Over the past three years, the company has achieved remarkable success thanks to the financial support and visionary leadership of its shareholders. We are now poised to enter an exciting new phase of development with the backing of our new shareholders. Our new shareholders place great emphasis on the growth of the healthcare industry and hold a highly favorable view of Baisheng’s prospects.”

“"The Chinese healthcare market holds immense growth potential, particularly the ultrasound sector, which has already reached a scale of €1.3 billion. We eagerly look forward to leveraging the expertise of our new shareholders and tapping into their extensive experience in the Chinese market to achieve even greater development."

Mr. Wu Guangming, Chairman of Yuwell Medical and Wandong Medicalstated: “The collaboration between Baisheng, Yuwell Technology, and Wandong Medical represents a landmark transaction with high strategic synergy in the history of the global medical technology industry.”This transaction represents a classic case of integrating Eastern and Western strengths, achieving complementary advantages in products, technologies, and talent. By leveraging the local expertise of BAI Sheng and the China Investment Consortium and integrating their respective resources, this partnership is poised to establish BAI Sheng as a truly global enterprise and one of the most competitive medical device companies worldwide.”