Bottom line: Alibaba is likely to enter talks to buy a strategic stake in Groupon or even make a bid for the entire company, following its disclosure that it has purchased 5.6 percent of the US company in the open market.
What exactly was leading Chinese e-commerce company Alibaba (NYSE: BABA) thinking when it quietly purchased 5.6 percent of Groupon (Nasdaq: GRPN) shares on the open market without informing the faded US group buying pioneer? That’s the question that will be making the rounds this week, following the surprise disclosure of Alibaba’s purchase that Groupon only learned about through a regulatory filing.
Of course the most intriguing possibility is that Alibaba could be weighing a bid to acquire Groupon completely, which wouldn’t be that preposterous for reasons I’ll explain shortly. Other media are putting a less aggressive spin on the move, saying that Alibaba simply hopes to learn from Groupon’s group buying skills that first propelled it to fame about 6 years ago. Read Full Post…
Bottom line: Shanda Group is likely to emerge this year as China’s next major global investor with 2-3 major deals, while Renren’s plans to transform into a high-tech investment company stand a 50-50 chance of success.
Two former Internet high-flyers that later flamed out are looking for new beginnings in finance, with Shanda Group and Renren (NYSE: RENN) both discussing their transformation plans in separate reports this week. Shanda was once China’s leading online game operator, and its chief Chen Tianqiao dreamed of creating an online entertainment empire. Similarly, Renren was once China’s leading social networking service (SNS) opeartor, at one time often called the Facebook (Nasdaq: FB) of China.
But both companies got overtaken in recent years, and were largely marginalized by better-run rivals like Tencent (HKEx: 700), NetEase (Nasdaq: NTES) and Weibo (Nasdaq: WB). As a result, Shanda founder Chen Tianqiao has recently sold off the various pieces of his former empire, most recently closing the sale of his original Shanda Games operation. Renren is also in the process of privatizing, as its core SNS business rapidly shrivels. Read Full Post…
Bottom line: Weibo’s elimination of the 140-character length limit for posts looks like a good strategic decision, as it consolidates its position as an alternative news source to traditional state-owned media.
Social networking (SNS) leader Weibo (Nasdaq: WB) is taking a radical new step and dropping the rule that strictly limits the length of microblog posts, in its bid to remain relevant and avoid being marginalized by dominant rival WeChat. The move is quite bold on the one hand, but also probably long overdue, in a world where people have many SNS options that provide more flexibility in the kinds of information and messages they share online.
The decision looks broadly positive for Weibo, which has evolved into an informal news source for many of its 200 million users. The company operates a service nearly identical to American SNS pioneer Twitter (NYSE: TWTR), and rapidly rose to become the clear leader in the space after Twitter itself was blocked in China in 2009. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 21. To view a full article or story, click on the link next to the headline.
Bottom line: Sina’s latest board reduction to just 5 members looks like a strategic move by Chairman and CEO Charles Chao, as he prepares a sale that will give him a major executive position at his company post-merger.
The share price isn’t the only thing shrinking these days at leading web portal Sina (Nasdaq: SINA). The board of one of China’s oldest Internet companies has also just undergone a major reduction, with 2 of its 7 members leaving without any sign of replacements. I’m not extremely familiar with Sina’s board and its dynamics, but it does seem like 5 members is quite small for a company of Sina’s size and could reflect a power play by longtime Chairman and CEO Charles Chao.
Such a play could be prelude to the sale of Sina to a rival, with e-commerce giant Alibaba (NYSE: BABA) as the most likely candidate. I’ve been predicting such a sale for a while now, and this latest move looks like the latest signal that Chao could be clearing out board members who might oppose such a deal. With just 5 members left on the board, Chao would only need 2 to agree with him to approve a deal that he would personally negotiate. Read Full Post…
Bottom line: Jack Ma’s hubris is the main driver behind Alibaba’s purchase of the South China Morning Post, and the newspaper’s declining fortunes are unlikely to reverse under its new ownership.
After weeks of speculation, e-commerce giant Alibaba (NYSE: BABA) has finally announced its purchase of Hong Kong’s SCMP Group (HKEx: 583), parent of one of Asia’s oldest and most influential newspapers, the South China Morning Post. Many reports are focusing on the implications of mainland Chinese ownership of a major newspaper in Hong Kong, where editorial standards are much more western and strict self-censorship policies like those required by Beijing don’t exist. But in my view, it’s more interesting to look at what this deal means commercially for Alibaba, and whether it makes sense.
Let’s begin with the news, which came as a slight surprise because it will see Alibaba buy the media assets of SCMP Group for an undisclosed price. (English article; Chinese article) That marks a shift from earlier reports, which had indicated that Alibaba founder Jack Ma would personally buy a minority interest to avoid the sensitive issue of mainland Chinese ownership of a Hong Kong newspaper. There’s no more detail on the actual transaction, though one report estimates the purchase will cost Alibaba around $100 million. Read Full Post…
Bottom line: New York has lost its appeal for listings by smaller Chinese Internet companies, but should remain attractive for sector leaders like Didi Kuaidi and Meituan-Dianping.
China’s imminent resumption of IPOs after a 4-month pause seems like a good opportunity to review what’s shaping up as the year of the “reverse IPO” in New York by Chinese companies. Market watchers will know that I’m talking about this year’s record wave of privatization bids by US-listed Chinese firms, which saw around 3 dozen companies announce plans to de-list from New York during the year with an eye to re-listing back in China.
That’s not to say that no Chinese companies listed in New York this year, and I was able to track down at least 4 that made such offers. But those 4 collectively raised a paltry $200 million, or just a tiny fraction of the nearly $30 billion that Chinese companies raised in a record year for New York IPOs in 2014. Read Full Post…
Bottom line: Weibo’s investment in mobile video app Miaopai looks like a smart move to build on its recent momentum, while 58.com’s spin-off of its Guazi used car service is mostly a management restructuring.
A couple of web-related fund-raising stories are in the headlines today, though their relatively small size reflects investor sentiment that is rapidly fading towards these money-losing Internet companies. The bigger of the 2 deals has short video app Miaopai raising $200 million, in a funding round led by China’s Twitter-like Weibo(Nasdaq: WB). The second has leading online classifieds site 58.com (NYSE: WUBA) spinning off its Guazi used car businesses, in a move aimed at giving the company more flexibility to raise money for its future growth.
The $200 million figure is one of the largest we’ve seen in recent months, but is well below mega-fundings in the first half of this year when China’s stock markets were rallying and fundings of $1 billion or more were almost ordinary. But the flow of money has slowed sharply in recent months as investors get impatient for profits, forcing a number of former rivals into mergers to accelerate their drive to profitability. Read Full Post…
Bottom line: Jack Ma is unlikely to tamper with content at the South China Morning Post if he buys a stake in the iconic Hong Kong newspaper, but instead will look for ways to leverage its content using more dynamic new media platforms.
A sketchily-sourced report from 2 weeks ago is suddenly getting major new credibility, with word that Alibaba(NYSE: BABA) founder Jack Ma is near a deal to take a major stake in Hong Kong’s SCMP Group (HKEx: 583), publisher of one of Asia’s oldest and most profitable English language newspapers. The biggest twist in the latest reports is that Ma himself and not Alibaba would invest in SCMP, owner of the South China Morning Post newspaper.
The earlier reports were based on a story citing vague rumors that Ma was in talks with the SCMP, leading me to say that such a move looked logical even if sourcing in the reports was quite shaky. (previous post) The newest report has far more solid sourcing and comes from the reputable Bloomberg, meaning the chances are high that a deal is really happening. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 19. To view a full article or story, click on the link next to the headline.
Tongwei Group Plans World’s Biggest Solar-Cell Plant in Sichuan (English article)
Bottom line: A deal for Alibaba to buy a minority stake in Hong Kong’s SCMP looks logical despite dubious sourcing in reports on such talks, and could help to revive the group’s flagging fortunes by bringing in new partnerships and other resources.
Just days after word emerged of a major shake-up in the newsroom of the South China Morning Post (HKEx: 583), new reports are saying that Chinese e-commerce giant Alibaba(NYSE: BABA) may be interested in a major investment or even outright purchase of Hong Kong’s leading English-language newspaper. Sourcing on the reports is quite flimsy, which I’ll describe shortly and makes me slightly dubious that such talks are happening.
But such a move also has a certain logic, since the SCMP’s current owner is reportedly looking to sell the newspaper that has a relatively modest current market value of about HK$2.8 billion ($360 million). What’s more, Alibaba has also been moving aggressively into the media and entertainment spaces, including its recent purchase of leading online video site Youku Tudou(NYSE: YOKU) and formation of a joint venture with a leading mainland financial newspaper. Read Full Post…