Bottom line: A new rival bid for Dangdang and the long closing period for Jiayuan’s privatization reflect growing shareholder resistance to low prices being offered for Chinese companies trying to de-list from New York.
Dangdang gets rival buyout bid
A couple of new headlines reflect the growing chorus of complaints about low bid prices being made for Chinese companies privatizing from New York, led by a surprise new rival offer for former e-commerce leader Dangdang (NYSE: DANG). In the other headline, online dating site Jiayuan (Nasdaq: DATE) is finally moving closer to the New York exit door, after a year-long process that saw the company’s original buyout offer meet with stiff resistance from shareholders unhappy about the price.
The volume of protest noise against some of the most recent offers has certainly been growing, as company shareholders try to get more money for their stock in the wave of buyout offers. The most recent twist saw shareholders cry foul over a management-led buyout bid for online cosmetics seller Jumei (NYSE: JMEI) last month. (previous post) A slightly different but related development saw the founder of medical clinic operator iKang (Nasdaq: KANG) cry foul after his own bid for his company got trumped by a higher offer from an independent bidder. (previous post) Read Full Post…
Bottom line: Sinovac may be forced to raise its buyout offer following a chorus of complaints from investors, while Ku6’s new buyout offer is unlikely to meet with any resistance due to its small size and big premium.
Sinovac gets buyout offer
The final days of the Year of the Ram are seeing 2 more US-listed Chinese companies head for the exit door, with new privatization announcements from vaccine maker Sinovac (Nasdaq: SVA) and Internet video company Ku6 (Nasdaq: KUTV). Sinovac’s announcement instantly drew criticism from one US fund manager for being too low, and it’s quite possible we could see some law firms that specialize in securities litigation voice similar criticism.
Meantime, no one is criticizing the Ku6 offer, mostly because this is a company that ceased to be relevant long ago. I’ve followed Ku6 since it first went public as Hurray Holdings in 2005. Back then it raised $70 million in its IPO, and it was acquired 4 years later by online gaming giant Shanda. But all that seems like a distant memory now, and the new privatization bid values the company at just $51.5 million. Read Full Post…
Bottom line: A flurry of lawsuits alleging undervaluation in the latest buyout offer for US-listed Chinese firm Synutra could signal growing new resistance to low valuations for many other existing offers.
Lawfirms pan Synutra buyout offer
The law firms that make their money by suing publicly traded companies have found a new reason to sue, taking aim at the dozens of Chinese firms now trying to privatize from New York. This new wrinkle in the wave of privatization bids for US-listed Chinese companies comes after infant formula maker Synutra (Nasdaq: SYUT) became the latest to get an offer from a management-led group to take the company private.
This marks the first time I’ve seen so many lawsuits threatened after a company announced the receipt of a buyout offer, with at least 3 firms saying the offer undervalues the company. Up until now, we’ve only seen minor shareholder resistance to most buyout offers, even though many of the buyers are taking advantage of depressed valuations for the companies being privatized. Read Full Post…
Bottom line: Qihoo is likely to complete its $9 billion privatization in the next few months at its original bid price, while Jiayuan’s buyer may have to raise its price again to placate unhappy shareholders.
Qihoo buyout advances, Jiayuan hits resistance
The year of the buyout for US-listed Chinese firms is ending on a loud note, with announcement of a formal privatization offer for security software specialist Qihoo 360 (NYSE: QIHU), the largest of the deals among the 3 dozen announced in 2015. But while Qihoo’s plan moves ahead, another older deal to buy out online dating site Jiayuan (Nasdaq: DATE) is running into trouble due to complaints about its low valuation. In the latest development on that front, a major third-party advisory service has recommended that shareholders reject the offer because it’s too low.
Last but not least, I’ll end this buy-out round-up with some whimsical speculation that Phoenix New Media (NYSE: FENG) may be next to receive a privatization offer. My speculation isn’t based on any insider information, but rather the simple fact that the company’s stock jumped 14 percent on Friday for no apparent reason. The company also looks similar to many of the others that have already received similar offers. Read Full Post…
Bottom line: Hong Kong’s IPO market will heat up in the first quarter of next year for non-financial Chinese offerings, while privatizations of Chinese firms from New York are likely to accelerate at raised offering prices.
Taomee, Wuxi Pharma join homeward migration
A series of new listings in Hong Kong and de-listings from New York are heating up the headlines as we head toward year-end, reflecting 2 of the major themes for 2015 IPOs. Hong Kong hasn’t exactly been a hotbed for new listings this year, but has been gaining recent momentum that includes news of a $300 million planned IPO by hotpot chain Haidilao. At the same time, other reports are saying that Bank of Zhengzhou has just launched its own Hong Kong IPO, spotlighting another trend that has seen a flurry of mainland Chinese banks try to tap the market to bolster their financially-stretched balance sheets.
Meantime across the Pacific in New York, children’s website Taomee (NYSE: TAOM) and drug maker Wuxi PharmaTech (NYSE: WX) have come closer to completing previously announced privatization plans, as part of a broader exodus of Chinese companies from the US. The former case has Taomee announcing it has formally signed a buyout deal to privatize the company, and Wuxi Pharma saying it has completed its own privatization. Read Full Post…
Bottom line: Domestic private equity is fueling a sudden resurgence in privatizations of US-listed Chinese firms, with a flurry of new deals likely to come after the signings of new buyout offers for Homeinns and Jiayuan.
Homeinns, Jiayuan move closer to US de-listings
Two companies looking to de-list their shares from New York and re-list back in China have taken major steps forward, with hotel operator Homeinns (Nasdaq: HMIN) and online dating site Jiayuan (Nasdaq: DATE) both announcing they have signed formal buyout offers to privatize. In an interesting twist to the privatization story that has seen dozens of US-listed Chinese firms announce similar plans, Homeinns and Jiayuan are both being purchased by China-listed firms as part of their buyout deals.
That means that once the buyouts are consummated, both Homeinns and Jiayuan will immediately become publicly listed in China. Such a development would mark a rapid shortening of the time these companies would need to return to Chinese stock markets from the US. In the past, the small number of similar migrations was typically taking 2 years or more to complete. Read Full Post…
Bottom line: iKang’s managers may have to raise their earlier buyout offer to counter a new rival bid for the company, which could embolden investors to demand similar better prices for other US-listed Chinese companies being privatized.
Bidding war erupts for iKang
An interesting new wrinkle has entered the recent privatization wave sweeping US-listed Chinese companies, with word that a group backed by some major investors is making a rival buyout offer for medical clinic operator iKang (Nasdaq: KANG). So far as I know, this is the first case of a rival bid emerging to challenge any of the nearly 3 dozen privatization offers to emerge this year, mostly from management-led groups.
That’s not to say that this latest development is completely unexpected. Many minority stakeholders have complained loudly that most of the management-led buyout offers to be announced so far grossly undervalue the companies. Those complaints have worked once or twice, most notably in the case of online dating site Jiayuan (Nasdaq: DATE), whose non-management suitor sharply raised its buyout offer after investors complained that the original bid was too low. (previous post) Read Full Post…
Bottom line: Shanda Games’ imminent de-listing could be followed by a behind-the-scenes consolidation by one or more savvy private equity firms to create a major new online game firm capable of challenging NetEase or even Tencent.
Shanda Games heads for de-listing door
Faded online gaming pioneer Shanda Games (Nasdaq: GAME) is finally heading for greener pastures, releasing what’s likely to be its final earnings report as its shareholders get set to vote on a plan to privatize the company. Shanda Games’ road to privatization has been long and tortured, and is only now finally coming to completion after its initial announcement nearly 2 years ago. (previous post) But that said, I do have to commend Shanda’s strong-willed founder and chief Chen Tianqiao for finally getting the job done.
From a broader perspective, Shanda’s departure continues a trend that has seen online game companies de-listing en mass, after their stocks struggled for years due to stiff competition. In an interesting twist to that trend, these gaming laggards have been one of the few groups to actually complete privatizations among the 3 dozen US-traded Chinese companies that announced such buyouts earlier this year. Read Full Post…
Bottom line: Investors are regaining confidence that some of the bigger, recently announced buyouts for US-listed China companies could be completed, but believe many smaller deals will ultimately collapse.
Perfect World completes buyout
Online game operator Perfect World (Nasdaq: PWRD) has formally completed its management-led buyout, offering us a good opportunity to check the status of dozens of other pending offers that look shaky due to recent turbulence in China’s stock markets. Perfect World was one of a handful of companies that launched their privatization drives before May, when a wave of new bids fueled by speculative money from China’s frothy stock markets suddenly began.
I’ve previously said that many of the earlier bids like Perfect World’s are likely to succeed, as their funding sources seemed more solid. But some of the other bids may run into trouble due shaky money sources that may rapidly disappear as China’s stock markets show signs of heading into another tailspin. Read Full Post…
Bottom line: New Oriental’s special dividend sends a signal that it has no plans to de-list from New York, even as short-sighted companies like Qihoo continue buyout plans in pursuit of higher valuations in China.
New Oriental awards special dividend
Nearly 2 weeks after the last US-listed Chinese companies announced plans to privatize, education specialist New Oriental (NYSE: EDU) is sending a different signal that indicates it has no plans to abandon its New York listing anytime soon. That signal comes in a footnote to New Oriental’s newly announced quarterly earnings, in which it declares a rare special dividend — something you wouldn’t expect a company to do if it was planning to soon de-list.
At the same time, software security specialist Qihoo (NYSE: QIHU) is reaffirming its previous plans to push ahead with its privatization scheme, even as investors remain skeptical that this particular deal could fall apart. Qihoo is easily the largest of China’s companies looking to privatize so far, and clearly investors are worried that the company won’t be able to complete its buyout worth nearly $10 billion due to the recent market volatility in China. Read Full Post…
Bottom line: Earlier announcers of privatization plans like Jiayuan are likely to succeed due to their more reliable funding sources, but many of the deals announced by Chinese firms in the second half of June could ultimately collapse.
De-listing bells keep ringing for Jiayuan
China’s sudden stock market rally isn’t reassuring US investors who believe that many of the most recent buy-out offers for New York-listed Chinese firms may collapse due to questionable funding. That has prompted at least 1 firm, online dating site Jiayuan (Nasdaq: DATE), to come out and openly say it is still committed to the privatization process that could ultimately end with its departure from New York and re-listing of its shares in its home China market.
The rationale for this kind of a move hasn’t changed throughout China’s massive stock market gyrations, which saw the main Shanghai index more than double over the past year at its early June peak, before crashing in a major sell-off. The crash has subsided in the last few days thanks to major intervention by Beijing, though it’s far from clear whether the selling binge is over. Read Full Post…
