Goodbye America? Renren Receives Go-Private Proposal
Renren, the social networking site dubbed the Facebook of China, is joining the ranks of Chinese companies disenchanted with U.S. stock exchanges.
The company has received a nonbinding go-private offer from its top executives. Chief Executive Joseph Chen and COO James Liu proposed to acquire shares of the company they don’t already own for $4.2 per American depository share — a 22% premium to the average closing price of the firm’s ADSs over the last 30 trading days. Chen and Liu currently own about 32% of Renren and have 49% voting power, the company said.
Shares of Renren have lost almost 70% of its value since 2011. The company is struggling to grow user numbers, as the country’s younger generation abandons static social networking sites and turns instead to smartphone apps, such as WeChat, Jiecao, Momo, Tantan, etc.
Renren’s offer follows other U.S.-listed Chinese companies in seeking to go private. Mobile Internet company Sungy Mobile, online dating platform Jiayuan and tutor service provider Xueda are among firms that have received preliminary go-private offers. Online game developer Shanda Games in April accepted a $1.9 billion private buyout proposal.
Those companies chose to list in the U.S. because China’s rigorous securities law — which requires firms seeking an IPO must have a track record of profitability– makes it difficult for them to tap domestic investors. The U.S. allowance of a two-tier shareholding system is also a factor behind the successful IPOs of e-commerce powerhouse Alibaba and JD.com .
The go-private trend comes as Chinese authorities consider a registration-based IPO system that will abolish profitability requirements. U.S.-listed Chinese companies are also missing out on the recent stock boom at home. Beijing Baofeng Technologies, an entertainment service provider that chose a Shenzhen IPO over an U.S. listing, traded at 307 yuan today, or 4207.5% of its listing price in March, before shares were halted. China’s ChiNext index has gained about 180% this year. |
发表于 2015-6-12 13:50
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