Several hedge funds, including Millennium Management and Athos Capital, have faced substantial losses following the unexpected collapse of a high-profile acquisition deal between two Chinese pharmaceutical companies, according to a report by Bloomberg.
The report cites unnamed sources as revealing that Izzy Englander’s firm held a 5.1% stake in China Traditional Chinese Medicine Holdings (TCM), which saw its stock plunge 35% on Monday after Chinese regulators failed to approve a privatisation bid from China National Pharmaceutical Group, known as Sinopharm. Athos Capital’s stake in TCM, meanwhile, recently rose to 5.3%, but both firms have since reduced their holdings.
Sources indicate that Ed Cooper, a senior portfolio manager at Millennium’s London office who focuses on corporate event-driven trades, was among those affected by the steep decline. Neither Cooper nor Millennium commented, and Athos Capital also declined to discuss its portfolio.
The transaction’s collapse follows Sinopharm’s inability to secure regulatory approvals by last Friday, leading to the bid’s expiration, according to a joint statement issued to the Hong Kong stock exchange. Sinopharm, the largest stakeholder in TCM, had previously pulled back from a similar buyout attempt in 2022.
Event-driven hedge funds had widely anticipated the deal, betting on TCM stock to rise to the offered price.
Monday’s stock price drop reportedly cut Millennium’s holdings value by about HKD469m ($60m), based on Bloomberg’s calculations. By the time of the drop, Millennium had accumulated 254.9m TCM shares, later trimming that to 246.2m shares, according to filings with the Hong Kong exchange.
