The following press releases and media reports about Chinese companies were carried on February 3. To view a full article or story, click on the link next to the headline.
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Yingli (NYSE: YGE) Gets 2 Bln Yuan Bank Loan Infusion, Prepares to Reorganize (Chinese article)
Alibaba (NYSE: BABA) Leads $800 Mln Funding for Augmented Reality Firm Magic Leap (Chinese article)
China Lodging Group (Nasdaq: HTHT) to Form China Time Share JV with Weshare (Chinese article)
China Media Capital Invests 100 Mln Yuan in Financial New Media Huaerjie Jianwen (Chinese article)
T-Mobile Supplier to Import Xiaomi, Meizu Smartphones (Chinese article)
Bottom line: Pactera is likely to get sold and re-listed in China later this year, while New Oriental is likely to make a domestic listing worth up to $100 million for its Xun Cheng online education in a similar time frame.
Blackstone shops around Pactera
The homeward migration of overseas-listed Chinese firms is moving ahead, with word that privatized IT outsourcing firm Pactera and the online unit of education giant New Oriental (NYSE: EDU) are both potentially eyeing domestic IPOs in the upcoming Year of the Monkey. These stories represent 2 different threads from the larger story of overseas-listed Chinese companies returning home to make new IPOs.
The thread represented by Pactera has seen around 40 US-listed Chinese companies receive privatization offers over the last year from buyout groups hoping to re-list the firms in China at higher valuations. The New Oriental bid represents a second, more recent trend that has seen US-listed category leaders indicate they will keep their primary listings in New York, but then spin off some of their smaller units for separate domestic listings in China. 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: Washington and Beijing risk seriously hindering global trade and M&A in high-tech products in the name of national security, and should be more transparent when blocking deals and trade over such concerns.
National security vetoes look increasingly protectionist
The national security debate was in 2 major headlines last week, as word emerged that Washington might consider blocking proposed major acquisitions of US companies by Chinese construction equipment giant Zoomlion (HKEx: 1157; Shenzhen: 000157) and memory chip maker Tsinghua Unisplendour. While neither deal has been vetoed yet, the talk comes less than a year after several Washington politicians expressed reservations that ultimately killed another deal by a Chinese company to purchase leading US memory chip maker Micron (Nasdaq: MU).
With the US entering an election year, the likelihood of more deals being killed for similar reasons could grow due to opposition from politicians seeking to curry favor from voters. The growing noise from Washington comes against a backdrop of similar moves by Beijing, which last year rolled out a new national security law that foreign technology firms said was overly invasive and discriminates against them. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 2. To view a full article or story, click on the link next to the headline.
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Youku Tudou (NYSE: YOKU) VP Questioned by Police for Illegal Activity (Chinese article)
New Oriental Proposes China IPO for Xun Cheng, After Tencent Investment (PRNewswire)
Blackstone Shops China Software Firm Pactera to Potential Buyers (English article)
Sinovac (Nasdaq: SVA) Announces Receipt of Proposal to Buy the Company (PRNewswire)
OPPO, Vivo Snap at Apple’s (Nasdaq: AAPL) Heels in China Mobile Market (English article)
Bottom line: McDonald’s could see a strong rebound in China over the next few years, as consumers give the chain a second look following an overhaul that includes the roll out of a high-tech burger customization program.
McDonald’s expands China high-tech burger program
Chinese consumers are welcoming a McDonald’s (NYSE: MCD) high-tech program for customized hamburgers, with word that the world’s largest burger chain will aggressively expand the concept in China this year. I have yet to visit one of the new stores in the program, but admit I’m intrigued by the concept that allows customers to personalize their burgers at computer kiosks inside stores before having them delivered to their tables.
That kind of curiosity and novelty factor could be key to jump-starting McDonald’s China business, which has stalled over the last few years as customers flock to a wide range of other alternatives more suited to local tastes. Both McDonald’s and crosstown rival KFC (NYSE: YUM), which is in the process of spinning off its China unit into a separate company, have suffered from slowdowns to their China operations in recent years for similar reasons. Read Full Post…
Bottom line: M&A and IPOs by Chinese gaming companies will remain low for the next 2-3 years due to lack of investor interest, but could pick up after that if some players start losing money and have to close or sell themselves to rivals.
Investors shun gaming companies
A new report on global gaming deals in 2015 is shining a spotlight on 2 major trends in China, namely the sector’s high degree of fragmentation and also the near-freeze in IPOs by Chinese companies last year. In fact, 3 Chinese gaming companies actually privatized from New York stock exchanges last year, accounting for more than half of the sector’s global deals last year in terms of total value.
Among the big Chinese deals, the largest saw stalwart Shanda Games finally privatize in a buyout valued at nearly $2 billion, ending a 2-year process. Another big gaming firm to privatize last year was veteran Perfect World, whose buyout was valued at $1 billion. The third was China Mobile Games, whose buyout was worth about $700 million. Read Full Post…
When does one dud plus one dud equal success? The answer to that question is usually “never”, but our city doesn’t seems unaware of that fact as it gets set to roll out a new short-stay visa waiver program that looks remarkably similar to another 3-year-old one that failed to attract much interest.
The new program will allow visitors from 51 countries to enter China visa-free for up to 6 days starting over the weekend, or double the limit of up to 3 days under the previous pilot program. The original program suffered from a number of problems, and there’s every indication that this new expanded edition won’t see much improvement. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 30-February 1. To view a full article or story, click on the link next to the headline.
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Terex Sale Talks with Zoomlion (HKEx: 1157) Continue despite Worry US May Block
McDonald’s (NYSE: MCD) to Launch 150 Customized Burger Stores in China in 2016 (English article)
China FDA May Take Back Alibaba’s (NYSE: BABA) Drug-Selling Authorization (Chinese article)
ZTE (HKEx: 763) Speeds Up Wireless Equipment Charging Business (Chinese article)
Xiaomi Removes Air Purifiers from Flagship Store Amid More Doubts (Chinese article)
Bottom line: Baidu’s reported plan to spin off many of its non-core units for separate listings in China looks like a smart move to attract Chinese buyers for its newer businesses while retaining US investors for its lucrative core search business.
Baidu eyes domestic IPOs for non-core units
Leading search engine Baidu(Nasdaq: BIDU) is reportedly eyeing plans to spin off many of its smaller units for IPOs in China, marking a novel alternative for the growing number of Chinese tech firms torn between listing at home and in the US. The US was the traditional choice for listings by Chinese venture-backed tech firms for most of the last 2 decades, since domestic listings were difficult or impossible during that time due to a heavy bias towards big state-owned companies.
But more recently China has rolled out a new group of boards aimed at attracting high-growth venture-backed companies. The earliest of those, the ChiNext board launched in 2009, has proven quite successful, nurturing such high-flyers as online video site LeTV (Shenzhen: 300104) and film production company Huayi Bros (Shenzhen: 300027). A more recently launched over-the-counter (OTC) board has also proven quite popular, and Shanghai plans to launch its own emerging industries board later this year. Read Full Post…
Bottom line: Alibaba’s shares are likely to remain under pressure through the rest of this year as it enters a new phase of slower growth and its stock faces short-term pressure from short sellers.
Investors unimpressed by Alibaba results
E-commerce leader Alibaba(NYSE: BABA) was hoping for praise and kudos when it posted quarterly results that beat market expectations, but instead is receiving a cold shoulder from Wall Street bears who are betting against the company. That’s the bottom line, as investors dumped Alibaba shares after the company reported quarterly revenue that was slightly ahead of expectations.
At the same time, other media reports say that Alibaba is on the cusp of a deal to sell its stake in leading Chinese group buying site Meituan-Dianping for around $900 million. This particular sale was reported previously, and thus isn’t huge news to investors. Still, many are probably disappointed that Alibaba is yielding this important piece of the China online-to-offline (O2O) services market to rival Tencent (HKEx: 700), which will now become Meituan-Dianping’s undisputed strategic partner. Read Full Post…
