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: Wanda may need to raise its offer price again to buy Carmike, while a plan to privatize its property unit stands a good chance of winning shareholder approval.
Wanda ups Carmike bid
Conglomerate Wanda Group is in a couple of a major headlines, one involving its traditional real estate business and the other for the newer entertainment unit it’s building up as part of a diversification drive. The real estate headline centers on Hong Kong-listed property developer Dalian Wanda (HKEx: 3699), which has just received an endorsement from a major shareholder in its bid to go private. The second item centers on Wanda’s fast-growing cinema business, and has the company boosting its offer for US theater operator Carmike (Nasdaq: CKEC) after minority stakeholders complained a previous bid was too low. Read Full Post…
Bottom line: Autohome’s shares will come under pressure after a mass defection of its middle management, most likely to start a rival company, while Ku6 is likely to close shop within the next 2 years following its de-listing from New York.
Mid-level managers leave Autohome en masse
A couple of new twists are bubbling through the headlines in a wave of buyout offers for US-listed Chinese companies, led by the latest signs that a privatization for online car site Autohome (NYSE: ATHM) is effectively dead. Those signs are coming in reports of a wave of resignations by mid-level company executives, following a failed management-led buyout bid. Meantime, online media site Ku6 Media (Nasdaq: KUTV) has formally completed its own buyout offer, meaning this insignificant player that was once a leader in China’s new media space will probably de-list very soon and could disappear completely within the next 2 years. Read Full Post…
Bottom line: A new China Life bid for iKang could trump Yunfeng, while 21Vianet could be mounting a stealth privatization bid that would see it slowly sell most of its shares to big buyers before mounting a formal de-listing attempt.
China Life eyeing bid for iKang?
A few strange twists are taking place in the story that has seen some 40 US-listed Chinese companies launch privatization bids since the start of last year, led by the surprise re-heating of a bidding war for private clinic operator iKang (iKang). In a separate headline, data center operator 21Vianet (Nasdaq: VNET) gave a new signal that it will abandon a previous buyout offer and may launch a stealth de-listing bid instead. And in the strangest development, the board of web portal operator Sohu (Nasdaq: SOHU) has rejected an investment plan by the company’s founder that looked like a prelude to a possible buyout offer at the time. Read Full Post…
Bottom line: YY’s abandonment of its privatization plan and concurrent share buyback look like savvy moves to build confidence and attract attention from investors, and could soon be followed by similar withdrawals by other big buyout candidates.
YY abandons privatization
Following a steady stream of signals hinting at new obstacles for US-listed Chinese stocks trying to privatize, social networking site YY (Nasdaq: YY) has become the first to formally abandon its plans to abandon New York. I’ve been predicting that up to half or more of the 40-odd privatization plans announced since the start of last year could ultimately collapse, and have to commend YY for being brave enough to be the first to openly discuss the abandonment of its buyout offer. The original buyout group led by YY’s chairman and CEO could have easily just remained quiet on the subject until everyone assumed the offer was dead. But in this case they’ve taken the more responsible route of admitting to failure. Read Full Post…
Bottom line: Dalian Wanda’s de-listing plan from Hong Kong is likely to succeed, while eLong could re-list in China and become the travel services provider for WeChat following its New York privatization.
Dalian Wanda joins homeward migration
A trio of new headlines are part of the recent homeward migration of offshore-listed Chinese companies, led by a highly anticipated $4.4 billion offer to privatize property giant Dalian Wanda (HKEx: 3699). Also making news is faded online travel agent eLong (Nasdaq: LONG), whose shareholders have just approved a privatization that will soon end its 12-year-old listing in New York. Finally there’s film production house Yongle Film and Television, which would have been a strong New York IPO candidate in a earlier era but is now in the process of making a backdoor listing in Shenzhen. Read Full Post…
Bottom line: Privatization plans by Autohome and iKang will face long delays due to shareholder resistance and rival bids, while Wanda Commercial’s similar buyout will proceed soon after some technical issues are resolved.
Autohome, iKang take buyout clashes to court
Three of the larger privatization bids by offshore-listed Chinese firms are running into snags, hinting at a growing wave of resistance to such offers considered by many as too low and opportunistic. Two of the most colorful tales involve online car site Autohome (NYSE: ATHM) and private clinic operator iKang (Nasdaq: KANG), whose management-led buyout deals both hit snags due to unexpected third-party developments. In the latest twist to those stories, Autohome is now taking legal action to prevent a separate share sale that could kill its own management-led buyout bid; while iKang is playing legal games with a rival bidder that trumped an original management-led buyout plan. Read Full Post…
Bottom line: Many privatization bids by Chinese firms hoping to re-list in China could collapse if the CSRC cracks down on backdoor listings, though de-listing plans backed by big private equity names could still succeed.
Privatizing shares tumble on CSRC rumors
Rumors that they might get a chilly reception from China’s securities regulator has sparked a major sell-off for shares of US-traded companies trying to privatize and re-list at home in search of higher valuations. The dive is one of the largest I’ve seen for any single group in quite a while, and could present a great buying opportunity for anyone who believes these companies can still successfully privatize and re-list in China.
But in this case I might be more inclined to agree with the pessimists, since China’s securities regulator is quite conservative, even though I’ve said it should continue to allow these re-listings. (previous post) In this case the China Securities Regulatory Commission (CSRC) may also be acting under direct orders from Beijing, which is already worried about another major sell-off on domestic stock exchanges like one early this year. Read Full Post…
Bottom line: Zhaopin’s slight raising of its privatization price could reflect minority investor complaints about undervaluation, while Autohome’s buyout price could rise up to 20 percent in a game of strategic maneuvering with Ping An.
Zhaopin raises buyout price
Minority investors have long complained that a wave of privatization bids for US-listed Chinese companies are grossly undervalued, and now the companies may finally be responding to those grievances. That’s my assessment based on the latest reports that say online recruitment site Zhaopin (Nasdaq: ZPIN) has quietly raised the bid price for its privatization plan, as valuation questions also threaten to derail a similar plan by online car site Autohome (NYSE: ATHM).
Minority investor complaints about undervaluation center on the fact that top managers often control a majority of their companies’ shares through direct and indirect relationships. That means they can choose whatever bid price they want and be assured of its acceptance at shareholder votes. But threats of lawsuits and rival bids, and also perhaps worries about being seen as greedy and unethical are forcing some of the management-led buyout groups to rethink their prices and offer more. Read Full Post…
Bottom line: 21Vianet’s new convertible bond indicates it may be abandoning its previous plan to privatize from New York, and could help to boost its shares by bringing in more investors from China.
21Vianet abandoning privatization?
Nearly a year after announcing a plan to privatize from New York, data center operator 21Vianet (Nasdaq: VNET) has just issued an unusual plan that could see it sell a major stake of itself to a group of Chinese buyers through a convertible bond issue. The plan comes as quite a surprise, since one wouldn’t expect this kind of move from a company that was expecting to imminently privatize.
Accordingly, we could interpret this move as hinting that 21Vianet is quietly abandoning its de-listing plan in favor of an approach that could appeal to many other US-listed Chinese companies whose own privatizations have also stalled over the last year. Such an approach would see these companies bring in major new Chinese investors through this kind of convertible bond issue, which could ultimately help those companies to achieve their target of raising their valuations. Read Full Post…
Bottom line: Autohome and E-House are both likely to complete their privatizations from New York, continuing the migration of US-listed Chinese firms returning home to seek higher valuations on China’s stock markets.
Autohome drives away from New York
The drive back home for New York-listed Chinese companies continues as we head into the new week, with online car site Autohome (NYSE: ATHM) becoming the latest to announce a privatization plan. In a slightly unusual twist to that story, Autohome shares actually rose above the offer price before the buyout deal was announced, suggesting investors were hoping for a bigger premium than the one offered. But they quickly fell back to the offer price in after-hours trading.
At the same time, online real estate company E-House (NYSE: EJ) announced it has signed a definitive deal to privatize, nearly a year after it first announced its plan to de-list from New York. E-House’s plan has gone down a windy road since it was first announced last June at the height of a rally that saw China’s stock markets more than double in a year. Since then Chinese markets have tanked twice, and are now about 40 percent lower than where they were when E-House first announced its offer. Read Full Post…
