Chinese news and social media company Sina, one of the country’s internet pioneers, has received a $2.7bn management buyout offer which would spell the end of its 20-year-long listing on Nasdaq.
The $41-per-share offer represents a 20 per cent premium to the average closing price over the last 30 days and a 12 per cent premium to its closing price on Thursday. Shares in Sina rose 9.5 per cent after the news.
The proposal would entail Charles Chao, Sina’s chairman and chief executive, taking the company private, including its 45 per cent stake in Weibo, China’s version of Twitter, which is also listed on Nasdaq. The stake includes 71 per cent of Weibo’s voting shares and control over its board.
Weibo has been Sina’s main growth engine in recent years after its news business was passed by rivals including Tencent News and ByteDance’s Jinri Toutiao. Sina also has a small, but fast-growing, online loans and payments business.
Weibo contributed 80 per cent of its revenue last year, which rose 3 per cent year-on-year to $2.2bn. But advertising sales at Weibo, which has more than 500m monthly users, has dipped during the coronavirus pandemic.
Thomas Chong, an analyst at Jefferies, said Sina’s business was “impacted by Covid-19 and intensified industry competition.”
“The China internet sector has been undergoing privatisation and secondary listings this year with Changyou privatised by its parent Sohu earlier and 58.com is in the process of privatisation,” added Mr Chong.
Mr Chao, who has been with the company since 1999, held 13.5 per cent of Sina’s shares with 58.6 per cent of the voting power as of March 31. Sina said a special committee of three independent directors would evaluate the proposal.
Management teams in China have capitalised in the past on the valuation gap between US and Chinese markets. In late 2015, Qihoo 360 was taken private and then quickly listed in Shanghai at a higher valuation.
A new bill passed by the US Senate in May could force Chinese companies to delist if they do not meet US accounting standards. The bill has prompted a large number of these companies to consider a listing in Hong Kong or go private.
So far this year NetEase and JD.com, both listed in the US, have launched secondary listings in Hong Kong, and bankers in the city have told the FT they are approaching nearly every eligible company to gauge their interest in a similar move.
Sina raised $68m in its 2000 public offering and was one of the first Chinese companies to use a so-called variable interest entity structure, allowing an offshore company based in the Cayman Islands to control its operating business in the mainland through a complicated system of contracts.
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