Cordlife shareholder Nanjing Xinjiekou withdraws offer to buy over remaining shares

SINGAPORE: Cordlife controlling shareholder Nanjing Xinjiekou Department Store has decided not to buy over the remaining shares of the troubled private cord blood bank.
In a bourse filing on Monday (Aug 26), Cordlife said it had received a seventh letter from SAC Capital – on behalf of Nanjing Xinjiekou – informing it that the shareholder was withdrawing the potential offer. 
This is as Nanjing Xinjiekou concluded that the offer may present risks that are “not aligned” with its investment criteria and business strategy, considering the current circumstances.
However, it said it “remains fully committed to leveraging on its expertise and resources to help the company navigate through its current challenges and rehabilitate the group’s business”.
Nanjing Xinjiekou, a Chinese company mainly engaged in health and elderly care services, has a roughly 20.3 per cent stake in Cordlife, according to its 2023 annual report.
The seventh letter comes after several previous notices from SAC Capital that said Nanjing Xinjiekou was considering making the offer, taking into account company developments and information. The sixth letter was dated Jul 24. 
Singapore-listed Cordlife has been in the spotlight after it was found to have damaged thousands of cord blood units, which were stored in seven tanks that were exposed to temperatures above the acceptable limits, the Ministry of Health (MOH) said in November 2023.
Cordlife is currently suspended by MOH from operating its cord blood banking services in Singapore, and is unable to collect, test, process or store any new core blood. The suspension was due to end on Jun 15, but MOH extended it for an additional three months, unless approval is given otherwise.
Nanjing Xinjiekou noted in its letter there is no certainty on the outcome of the ongoing investigations or when MOH will lift the suspension on Cordlife’s operations.
In a bourse filing on Aug 15, Cordlife said it had also lost its accreditation with the Association for the Advancement of Blood and Biotherapies (AABB), an international blood bank body that sets quality and safety standards for blood and biotherapies groups.
Cordlife added that AABB can accredit it only after MOH permits it to resume its business, and only after it has fully resolved all quality issues and has several months of records available for onsite inspection.
The blood bank reported a net loss of S$12.4 million (US$9.5 million) for the six months ended Jun 30, 2024, a reversal of the S$2.2 million net profit for the same period in 2023.
It said on Aug 15 that it expects the ongoing investigations by MOH and the fixed costs it continues to incur during the suspension to have a continued negative financial impact on its Singapore’s operations – the group’s biggest revenue contributor.  
Besides Singapore, Cordlife also operates cord blood banking services in Hong Kong, and has customers from Indonesia, Macau and the Philippines.