Bottom line: A third-party buyout offer for eHi could presage a wave of similar new bids for undervalued, profitable Chinese companies, while withdrawal of Jumei’s buyout bid could be followed by a new, lower offer.
eHi gets buyout offer
After a period of relative quiet, the privatization wave that swept US-listed Chinese companies nearly two years ago is bubbling back into the headlines with a couple of stories from different directions. In the “leaving” direction there’s car rental comp eHi Car Services (NYSE: EHIC), which has received a third-party offer to privatize for a slight premium to its latest stock price. In the other direction there’s cosmetics e-commerce firm Jumei International (NYSE: JMEI), which is finally withdrawing its management-led buyout offer nearly two years after first receiving the bid.
There’s no broader theme to these two deals, except perhaps that investors have become quite skeptical about such offers. The Jumei deal’s collapse shows why such skepticism is sometimes merited, though it’s also worth pointing out that about two-thirds of US-listed companies that announced plans to privatize during the wave in early 2015 actually completed those plans. Lackluster response to the eHi deal also shows a certain skepticism, probably because shareholders are still worried that many of these buyout bids are low-balling companies’ real values. Read Full Post…
Bottom line: Jumei could formally abandon its stalled buyout plan soon, putting more downward pressure on its stock, while iKang needs to enter serious negotiations with two bidders for the company.
Jumei, iKang under pressure over stalled buyouts
Ever wonder what happened to a handful of buyout plans for US-listed Chinese companies that were announced more than two years ago but never got completed? That’s certainly not a question that keeps most of us up at nights, but it’s suddenly popping into the headlines with a series of scathing letters from a minority investor called Heng Ren, which is criticizing two of the unfinished deals.
Specifically, Heng Ren is blasting online cosmetics seller Jumei International (NYSE: JMEI) and clinic operator iKang (Nasdaq: KANG), which both announced plans to privatize quite a while ago but have yet to complete those. These aren’t the only two whose privatization plans, which were part of a wave in the first half of 2015, failed to get completed. But most of the others that failed to complete their buyouts, including YY (Nasdaq: YY) and Momo (Nasdaq: MOMO), made specific announcements that they were abandoning their plans. Read Full Post…
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: New complaints about deceptive and unfair practices by short seller Andrew Left and online cosmetics seller Jumei have some validity, but such actions are ultimately just forms of normal market behavior.
Jumei under fire for low offer
A couple of headlines are shining a spotlight on the recent wave of privatizations and an older flurry of short-seller attacks involving offshore-listed Chinese companies, amid accusations of unfair practices and market manipulation. One headline has Hong Kong’s securities regulator bringing a case against notorious short seller Andrew Left and his company, Citron Research, claiming they knowingly published false information about locally listed Chinese real estate developer Evergrande (HKEx: 3333). The other is seeing several smaller US fund managers protest the low value of a new privatization offer for online cosmetics seller Jumei International (NYSE: JMEI).
These cases share the common theme that each is market driven, and thus each seems perfectly acceptable. Short sellers are famous for issuing misleading information in a bid to drive down a company’s share price, but can only succeed if other investors believe them. Similarly, most of the privatization offers for Chinese companies over the last year offer healthy premiums to the latest trading prices, even if those prices are down sharply from earlier IPO levels. Read Full Post…
Bottom line: Canadian Solar’s Recurrent Energy unit is likely to make its first public filing for a New York IPO in the next 2 weeks and should get a positive reception, while Jumei is likely to quietly de-list from the US in the next 3-4 months.
Recurrent Energy gets big new financing
One of the few Chinese IPOs likely to happen in New York this year is moving closer to the launch gate, with word of major new financing for the power plant-building unit of solar panel maker Canadian Solar (Nasdaq: CSIQ). But while that IPO for Recurrent Energy moves closer to the IPO gate, announcement of a new privatization bid for online cosmetics seller Jumei International (NYSE: JMEI) is far more typical for the market these days.
This pair of stories reflect a growing new reality for US-listed Chinese companies. That reality is seeing some of China’s leading private companies choose New York for their listings, banking on interest from global investors seeking to buy into the China growth story. At the same time, many smaller lesser-known Chinese companies listed in New York have discovered US investors are far less interested in their stories, and are privatizing with plans to re-list and hopefully get higher valuations back in China. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 18. To view a full article or story, click on the link next to the headline.
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China’s Zoomlion (HKEx: 1157) Bids for Terex, Stokes US National Security Fears (English article)
Marriott (NYSE: MAR) Enters China Mid-Range Hotels, Targets 100 Fairfield Hotels by 2021 (Chinese article)
Ingram Micro (NYSE: IM) to Be Bought by Tianjin Tianhai for $6 Bln (English article)
Jumei (NYSE: JMEI) Announces Receipt of Going Private Proposal (PRNewswire)
Didi, Lyft to Launch Joint Car-Ordering Platform Within 3 Months – Lyft CEO (Chinese article)
The following press releases and media reports about Chinese companies were carried on August 21. To view a full article or story, click on the link next to the headline.
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China Smartphone Sales Fall for First Time: Gartner (English article)
P2P Lending Site Dianrong Raises $200 Mln in C-Series Funding (Chinese article)
China Mobile (HKEx: 941) Announces 2015 Interim Results (HKEx announcement)
MIIT to Convene Meeting of 3 Major Telcos, Leadership Change Possible (Chinese article)
Bottom line: Baozun’s IPO is likely to price in the middle of its range and debut flat despite its strong credentials, as waning sentiment towards Chinese Internet companies may prompt other recently listed names like Jumei to launch privatization bids.
Baozun IPO gets lukewarm response
Sentiment towards China-listed US firms continues to show signs of weakening, with word that e-commerce website designer Baozun has had to scale back its IPO in New York as its shares move closer to their trading debut. Meantime, shares have jumped over the last week for e-commerce firm Jumei International (NYSE: JMEI), amid talk that it may be considering a privatization bid to re-list back back in China.
Both stories reflect a recent trend that has seen a growing number of second-tier Chinese Internet companies abandon New York listings due to lack of investor interest. Many are believed to be eying re-listings in China, where their names are better known and companies of all types have achieved lofty valuations these days during a stock market surge that has seen shares double since a rally dating back to last summer. Read Full Post…
Bottom line: A new audit reveals how widespread counterfeit goods are on Chinese e-commerce sites, which will remain a major risk for site operators and their shareholders.
Taobao slammed in piracy audit
A new audit from State Administration For Industry and Commerce (SAIC) is showing just how pervasive fake goods are on the Chinese Internet, underscoring the huge risk that consumers face when purchasing online. The results underscore the huge risk to e-commerce firms as well, since many of China’s top names including Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD) operate so-called “open platforms” that are simply online marketplaces where third-party merchants can sell their goods. Such merchants are notoriously hard to police, and these latest results show that they frequently offer fake and substandard products to buyers. Read Full Post…
Internet executives were busy quashing a number of rumors on their microblogs this week, with smartphone sensation Xiaomi trying to stamp out reports of bitter relations with SNS giant Facebook (Nasdaq: FB), and e-commerce giant Alibaba (NYSE: BABA) quashing talk of a major new investment in South Korea. But some of the more interesting chatter focused on the concept of company valuations, and just how widely such valuations can vary for China’s dynamic tech firms.
At the same time, a coming flurry of year-end parties began to kick off in the run-up to the Chinese New Year holiday that’s just a month away. The microblogging realm saw e-commerce giant JD.com (Nasdaq: JD) singing its own praises at the company’s annual party, taking a shot at fast-fading rival Dangdang (NYSE: DANG) in the process. At around the same time, a stumbling Sina Weibo (Nasdaq: WB) also held an annual awards ceremony for notable microbloggers, in its own attempt to remain relevant in the social networking realm. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 8. To view a full article or story, click on the link next to the headline.
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Alipay Expands Offline Payment Network through Third-party Agencies (English article)
Xiaomi’s Buying Spree Gives Apple, Samsung New Reasons To Sweat (English article)
