Bottom line: Qunar looks like the latest Chinese buyout candidate to become involved in a contested bidding war, while Autohome is unlikely to succeed in efforts to stop the sale of a stake in the company by its largest shareholder.
A flurry of headlines from the wave of privatizations by US-listed Chinese companies are in the news as the week winds down, led by word that online travel site Qunar (NASDAQ:QUNR) has become the latest to get a buyout offer. Qunar wasn't the only one lining up to leave New York, as game specialist Sky-mobi (NASDAQ:MOBI) also announced its own plan to go private. Meantime, a hotly contested privatization by online car specialist Autohome (NYSE:ATHM) has taken a few new twists, and wind power equipment maker Ming Yang (NYSE:MY) says it has just completed its own previously announced privatization.
The appearance of 4 relatively big headlines from the privatization story on the same day is probably partly coincidence, but also reflects how frenzied and also turbulent this tale has become. The story has Chinese companies rushing to de-list from New York and re-list at higher valuations back in China. But some investors and China's own regulator don't like many of the plans, calling them opportunistic and disorderly, and have tried to slow or stop the migration.
The new offer for Qunar is a bit strange, because it's coming from a party named Ocean Management that's not disclosing any ties to Qunar's biggest shareholders - leading online travel agent Ctrip (NASDAQ:CTRP) and top search engine Baidu (NASDAQ:BIDU) (company announcement; Chinese article). The group is offering $30.39 for each of Qunar's American Depositary Shares (ADSs), representing a 15 percent premium to its last closing price.
I suspect we'll hear more on this story in the next few days, since it does appear to be coming from a third party unrelated to Ctrip and Baidu. Ctrip was blindsided last year in a similar deal, which saw eLong (NASDAQ:LONG), another company it controlled, receive a surprise buyout offer from Internet giant Tencent (OTCPK:TCEHY, HKEx: 700) (previous post). Qunar certainly looks like a logical company to go private, since it's already controlled by Ctrip and Baidu, and it's possible this apparently third-party offer could mark the start of a brief bidding war.
Next, there's Sky-mobi, whose privatization offer looks more typical of what we've seen from many of the 40-odd companies to launch such bids. The bid is coming from a management-led group that is offering $2.10 per ADS, representing a 19 percent premium from the stock's last closing price (company announcement). There's not much more to say about this offer, except that the buyout price is about a quarter of Sky-mobi's $8 IPO price in 2010, showing just how far the stock has fallen since then.
Autohome Case Goes to Court
The case involving Autohome is far more interesting, and has pitted a management-led group trying to privatize the company against its biggest stakeholder, Australian telco Telstra (OTCPK:TLSYY, ASE:TLS), which owned 47 percent of the company. The buyout group had been aiming to purchase Telstra's stake, but was thwarted when the company signed its own separate deal to sell its shares to Chinese financial services giant Ping An (OTCPK:PIAIF, OTCPK:PNGAY) (previous post).
Now, new reports are saying that Telstra has successfully completed its stake sale for $1.6 billion, even as a court in the Cayman Islands, where Autohome is presumably registered, issued an order earlier this week blocking the sale (English article; Chinese article). The reports add the blocking order is simply temporary, pending a hearing on the matter that is set for June 24, which happens to be today. I'm unfamiliar with the complex legal process in this situation, but honestly can't believe a judge will ultimately block Telstra's sale, which is a free market transaction and doesn't appear to be illegal.
We'll close out this privatization round-up with the simple story of Ming Yang, which really did look like a promising company when it offered its ADSs for sale at $14 apiece in its 2010 IPO. But like many of its US-listed Chinese peers, Ming Yang shares have lost much of their value since then, and were ultimately purchased for just $2.51 apiece in the buyout (company announcement).
Ming Yang's departure does seem like a loss for Wall Street, since the company's revenues were still sizable and growing in its last report, even though its profits were under pressure. But at the end of the day, the company just couldn't find an audience for its new energy story, and its departure from Wall Street is really just an example of market forces in action.
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