AsiaInfo Nears The End With Buyout Vote
The end of life as a public company is fast approaching for telecoms software maker AsiaInfo-Linkage (Nasdaq: ASIA), marking the end of a long chapter for one of China’s first technology firms to list overseas. A newly announced special meeting will see AsiaInfo shareholders vote on a plan to privatize the company, whose shares have been ignored for years now by western investors. More broadly speaking, AsiaInfo’s looming buyout represents the challenges that smaller China tech firms face as they struggle to be noticed by western investors.
AsiaInfo’s life as a public company began with its listing on the Nasdaq in 2000, and now that chapter of its life looks set to close with a shareholder vote set for December 19 on whether to accept a buyout offer that would privatize the company. (company announcement) In its more than 13 years as a publicly traded company, AsiaInfo’s stock has traveled all over the map. It zoomed out of the gate by climbing to nearly $100 on its trading debut in 2000, quadrupling from its offering price of $24. Its shares moved quickly down after that as the Internet bubble of the late 1990s burst, and they have been below $30 for more than a decade now.
The stock faced a second crisis starting in 2011 when many western investors started to question the accounting practices of many US-listed Chinese companies. AsiaInfo stock mostly languished after that, and the current buyout offer announced in May will give investors $12 for each of their shares. (company announcement) For people too lazy to do the math, that means anyone who bought shares during the IPO and was foolish enough to hold them up until now will get a negative 50 percent return on their investment.
AsiaInfo will become just the latest Chinese tech firm to de-list from New York, joining a steady stream of recent privatizations. Others to de-list or in the process of doing so include former high-flyers like game operator Shanda Interactive, outdoor advertising specialist Focus Media, chip maker Spreadtrum Communications (Nasdaq: SPRD) and and IT services firm Pactera (Nasdaq: PACT), just to name a few. But while those de-listings have been mostly orderly and quiet, AsiaInfo has given investors a bit more drama in its privatization.
The company first announced it had been approached by a potential buyer in early 2012, and later hired an adviser to explore rival bids. The original buyer, a group led by a unit of the powerful Chinese Citic Group conglomerate, ultimately won the contest more than a year after expressing its initial interest. That triggered a flood of shareholder lawsuits, leading me to suspect that rival bidders that were willing to offer more money were unhappy at Citic’s selection as the buyer. (previous post) Presumably those lawsuits have been settled now, as AsiaInfo nears the finish line in this long and colorful process and prepares to go private next month.
The company’s shares last traded at $11.64, and didn’t move much on the announcement of the shareholder vote. Perhaps there’s still some skepticism that the deal will actually close, or maybe unhappy shareholders may mount a rebellion at the December vote. But the more likely case is that western investors ceased to notice or care about AsiaInfo long ago, an increasingly common problem for many smaller US-listed Chinese firms. That’s good in a way, as it means only Chinese companies with high profiles will go overseas to list in the years ahead. But at least for now, it also marks the end of a chapter that saw US investors fall into and then out of love with just about any Chinese tech firm that listed its shares in New York.
Bottom line: AsiaInfo’s looming privatization marks the end of more than a decade of fascination by western investors with Chinese tech firms.
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