Bottom line: A new round of buyouts for US-listed Chinese firms is being greeted with skepticism due to China’s volatile economy, and could offer a good buying opportunity for investors with strong appetite for risk.
Investors dump E-House shares after new buyout offer
In what looks like an emerging new trend, investors are dumping shares of online real estate services firm E-House (NYSE: EJ) after it announced a new lower offer price for its shares under a privatization bid first announced in June. This lowering of the price doesn’t come as a huge surprise, since US-listed Chinese shares have tumbled since many first announced privatization bids in the first half of the year with an eye to re-listing back in China.
But what does come as a surprise is US investor reaction to the new offer. In the case of E-House, the company’s shares fell more than 5 percent after it announced the new buyout price, which still represented a nearly 7 percent premium to the stock’s last close. Normally one would expect the shares to rise after such an announcement to approach the new bid price. But in this case the sell-off seems to reflect investor skepticism that the new deal will ever get completed, even at the lower price. Read Full Post…
Bottom line: Weak share reaction to Ming Yang’s new buyout offer and a low valuation for Giant Interactive’s China backdoor listing reflect weakening investor sentiment towards poorly performing Chinese Internet companies.
Chilly reaction for Ming Yang buyout plan
After a brief period of relative quiet, movement is picking up again in the tide of Chinese companies privatizing from New York to re-list back in China. This time former new-energy high flyer Ming Yang (NYSE: MY) announced it has received a management-led buyout offer, becoming the latest firm to receive such an offer. Meantime in China, one of the earlier firms to privatize, gaming company Giant Interactive, has taken the latest step for a backdoor listing in Shenzhen using a shell company called New Century Cruises. (Shenzhen: 002258).
But in an interesting twist to the homeward migration story, a chilly reception from investors seems to reflecting shriveling interest in these poorly performing Chinese companies. In the Giant story, the proposed new valuation for the company looks quite low — far less than what Giant was worth when it de-listed from New York in 2013. That’s quite a switch from what Giant’s talkative chief was saying just 4 months ago, when he boasted his company might be able to get valued as much as 5 times the $3 billion it was worth when it was still listed in New York. Read Full Post…
Bottom line: Mindray is likely to finally privatize following its announcement of a new, lowered offer price, kicking off a new round of revised bids for some of the other Chinese companies that received similar offers earlier this year.
Mindray lowers buyout offer price
In a move that didn’t get investors too excited, medical device maker Mindray (NYSE: MR) announced that a group aiming to privatize the company has lowered its earlier offer price to reflect recent declines in the company stock. Shareholders greeted the news by dumping Mindray stock, which ended the latest session at $23.60, or 13 percent below the revised offer price of $27 per American Depositary Share (ADS).
Frankly speaking, I’m quite impressed that this deal is moving forward at all, since I fully expect most of the 3 dozen similar privatization bids announced earlier this year to ultimately collapse. Mindray is the first of the huge field of buyout candidates to update investors on the status of its bid since shares of US-listed Chinese companies began to tank in sync with a much louder sell-off on China’s domestic stock markets in June. 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: 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…
Bottom line: Chinese Internet blue chips like Baidu and Ctrip should continue to flourish on Wall Street due to their leading status, while shares of smaller names will sputter and even plunge if a recent wave of buyout offers starts to collapse.
Baidu in $1.25 bln bond offer
The last 2 days have been most notable for what hasn’t happened over that time, namely the announcement of any new buyout offers for US-listed Chinese companies. Barring any new announcements on this final day of the trading week, the second quarter of 2015 is likely to end with a record 20 such privatization bids for Chinese firms looking to de-list from New York in search of better valuations back in China.
At the same time, 2 of China’s premier US-listed Internet companies are on the cusp of issuing a combined total of nearly $2.5 billion in new bonds, reflecting a new reality for Chinese companies on Wall Street. That reality is allowing China’s leading Internet names like search giant Baidu (Nasdaq: BIDU) and top online travel agent Ctrip (Nasdaq: CTRP) to still do quite well in New York, even as the far bigger number of lesser-known companies see their shares sputter. Read Full Post…
Bottom line: A booming China stock market and IPO reforms could fuel a new wave of re-listings by Chinese tech and media firms that were formerly traded in New York, led by an upcoming backdoor listing by Focus Media.
Xueda gets buyout offer
A pair of stories in the headlines today are highlighting a nascent movement that could see a growing number of US-listed Chinese firms take down their shingle in New York to return to stock markets closer to home. No companies have made such a move yet, but advertising specialist Focus Media could soon become the first with word that it’s moving closer to making a backdoor listing in China after leaving New York in 2013.
Meantime in a related piece of news Xueda Education (NYSE: XUE) said it has received a buy-out offer from Chinese financial firm Insight Investment (Shenzhen: 000526). Such a move would continue a trend that has seen a growing number of neglected US-listed Chinese firms abandon New York, where their shares have stagnated over the last few years. Read Full Post…
I’ll start this post with a major disclaimer, since one of my main reasons is simple sentimentality for writing about the newly announced buyout of New York-listed hospital operator Chindex (Nasdaq: CHDX) by a unit of the aggressive Fosun Group. When I first arrived in Beijing in 1987 as recent college graduate, I worked briefly in Chindex’s Beijing offices, which at the time were in the old Xiyuan hotel near the Beijing zoo. Since then, the company has transformed from its early days as an importer of medical and industrial equipment to its current focus on building and operating hospitals and clinics. Along the way it also made an IPO, and has quietly grown into a company with a market value of nearly $300 million. Read Full Post…
