Two months after stating it plans to buy a controlling stake in the public shell of Shanghai-traded battery maker Wanli to gain access to Chinese capital markets, SouFun (SFUN -2.3%) says it has entered a share subscription agreement through which it will obtain Wanli shares in exchange for the transfer of assets featuring a preliminary valuation of RMB16.18B ($2.46B).
Wanli has also entered into an asset sale agreement with its controlling shareholders, through which it will sell all of its non-cash assets and liabilities. In addition, Wanli is issuing up to RMB3.16B ($480M) worth of shares through a private placement. The shares will be subject to a 36-month lockup.
After the transactions, SouFun, which also refers to itself as Fang, will own a 70% stake in Wanli. CEO Vincent Mo: "We are expecting this restructuring to be closed in the near future and provide strong support to our fast growing e-commerce, financial services and online media business."
SouFun (NYSE:SFUN) is acquiring a controlling stake in the public shell of Shanghai-traded lead storage battery maker Wanli, with the goal of gaining access to Chinese capital markets. In tandem with the deal, Wanli will be selling shares to IDG Capital and other investors through a private placement.
SouFun: "SouFun plans to maintain not less than 70% of the equity stake in Wanli following the acquisition and direct share placement. SouFun will not pay cash for the Wanli stake.The acquisition is expected to be conducted through an assets swap. Wanli plans to spin off its non-cash assets and all liabilities to a third party and SouFun plans to inject certain parts of its businesses (including online media business, Internet financial services, research and big data business), which is projected to be valued at no more than RMB17 billion, into Wanli."
SouFun will continue trading on the NYSE. CEO Vincent Mo: "With access to both US and China capital markets, we will be in a much better position to expand aggressively to accelerate our online media business, Internet financial services and e-commerce businesses to build up a greater company."
The deal comes three months after IDG, Carlyle, and members of management agreed to invest up to $1B in SouFun via stock and convertible notes.
Adding to the flurry of going-private offers recently made for U.S.-traded Chinese companies, Qihoo CEO Hongyi Zhou has (in partnership with investment firms) offered to take his company private for a 16.6% premium to Tuesday's close.
YY is up 4.7% premarket to $78.32, and SouFun (NYSE:SFUN) is up 4.6% to $9.35. Both companies have been the subject of speculation that they could join the ranks of firms receiving buyout offers. A 1.7% overnight rally in Shanghai could also be providing a lift.
Chinese online classifieds leader 58.com (NYSE:WUBA) has bought Anjuke, owner of a popular online real estate listing platform for home buyers and renters, for $267M - $160.2M in cash and 5.09M ordinary shares (equal to 2.55M ADS').
58.com asserts the deal will allow it to "create China's largest secondary and rental real estate platform by combining 58.com's housing content category with Anjuke's platform," and to expand into primary real estate services.
Chinese online real estate leader SouFun (NYSE:SFUN) fell 5.7% today in response to the news, and peer E-House (NYSE:EJ) fell 1.8%. Reacting to the deal, 86Research's Anthony Tong argued today 58.com's listing service might become an appealing alternative to SouFun clients upset about the company's efforts to partner with offline real estate agencies they compete with. "The real estate agents are looking for an alternative. 58.com with Anjuke is a perfect choice.”
58.com closed down 1.5%. Along with the Anjuke deal, the company announced it's releasing its Q4 report on March 9.