Sinovac Board of Directors Unanimously Rejects an Unsolicited Partial Tender Offer

Sinovac Biotech Ltd. (NASDAQ: SVA) (“SINOVAC” or the “Company”), a leading provider of biopharmaceutical products in China, announced today that its Board of Directors (the “Board of Directors”) unanimously determined that the partial tender offer (the “Tender Offer”) by Alternative Liquidity Index LP (“Alternative Liquidity”) to acquire up to 10,000,000 common shares of Sinovac (the “Shares”) for $0.03 per share in cash (the “Offer Price”) is NOT advisable and is NOT in the best interests of the Company or its shareholders (“Shareholders”). Accordingly, the Board of Directors recommends that the Shareholders reject the Tender Offer and not tender their Shares for purchase pursuant to the Offer to Purchase by Alternative Liquidity.

The Company has filed a Schedule 14D-9 with the United States Securities and Exchange Commission (the “SEC”) detailing the reasons for its rejection of Alternative Liquidity’s Tender Offer.

The Tender Offer was reviewed and considered by the Board of Directors, none of whom are affiliated with Alternative Liquidity. The Board of Directors took into account various factors in evaluating the Tender Offer and in support of its recommendation that the Shareholders reject the Tender Offer and not tender their shares in the Tender Offer, including the following.

1. The Company believes the implied valuation based on the Offer Price is less than the value of the Company’s assets. The Board of Directors believes that the Company has strong cash reserves and short-term investments. As of June 30, 2023, cash and cash equivalents and restricted cash totaled $1.6 billion. This amount of cash and cash equivalents represents approximately $14.40 per Share, based on the number of common shares and series B convertible preferred shares outstanding as of June 30, 2023. In addition, as of June 30, 2023, the Company’s short term investments totaled $9.4 billion. The Company also posted $14.0 million of net income attributable to common shareholders, or $0.14 per basic and $0.15 per diluted share, in the six-month period ended June 30, 2023.
2. Alternative Liquidity acknowledges that it does not have any accurate means for determining the present value of the Company’s shares. Alternative Liquidity states that it “has not performed or commissioned any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion respecting the value of the Shares.” The Board of Directors believes this illustrates the lack of credibility of Alternative Liquidity’s valuation methods and the inadequacy of the Offer Price.
3. Alternative Liquidity further states that “Shareholders who tender their Shares will give up the opportunity to participate in any future benefits from the ownership of Shares, including potential future dividends by the Company from operations or dispositions, and the Purchase Price per Share payable to a tendering Shareholder by the Purchaser may be less than the total amount which might otherwise be received by the Shareholder with respect to the Shares from the Company.” In addition to the aggregate total of $11.0 billion of cash and short-term investments, the Company’s principal business objective remains providing attractive risk-adjusted returns to its Shareholders through the sale of a combination of the Company’s diversified vaccines/biomedical products and potential long-term appreciation in the value of the Company through its R&D efforts in vaccines/biomedical products.
4. Alternative Liquidity has made similar unsolicited partial tender offers for the stock of other public companies.
5. Given the Offer Price, the Board of Directors believes that the Tender Offer represents an opportunistic attempt by Alternative Liquidity to make a profit by purchasing the Shares at a very low price relative to their value, thereby depriving the shareholders who tender Shares in the Tender Offer of the potential opportunity to realize the full long-term value of their investment in the Company. The Board of Directors’ belief in this regard is supported by Alternative Liquidity’s own characterization of the Tender Offer. Specifically, the Board of Directors notes the following statement in the Tender Offer Statement on Schedule TO: “The Purchaser is making the Offer for investment purposes and with the intention of making a profit from the ownership of the Shares.”
6. In addition, the Board of Directors notes that the Tender Offer can be amended for various reasons. Accordingly, the Board of Directors notes that there can be no assurance that the Tender Offer would be completed as soon as Alternative Liquidity implies, or with the same terms and conditions, including without limitation, the Offer Price. Finally, Shareholders’ tenders of Shares pursuant to the Tender Offer are irrevocable and may only be withdrawn prior to the Expiration Date, currently September 29, 2023, by following the strict procedure described in the Offer to Purchase.

In view of the number of reasons and complexity of these matters, the Board of Directors did not find it practicable to, nor did it attempt to, quantify, rank or otherwise assign relative weight to the specific reasons considered.