Chinese news and social media company Sina, one of the country’s internet pioneers, has received a $ 2.7 billion management buyout offer, which would spell the end of its listing on the Nasdaq for 20 years.
The $ 41 per share offer represents a 20% premium over its average closing price over the past 30 days and a 12% premium over its Thursday closing price. Sina shares rose 9.5% after the news broke.
The proposal would involve Charles Chao, chairman and CEO of Sina, to take the company privately, including its 45% stake in Weibo, the Chinese version of Twitter, also listed on the Nasdaq. The stake includes 71 percent of the voting shares of Weibo and the control of its board of directors.
Weibo has been Sina’s main growth driver in recent years after its news business was adopted by competitors such as Tencent News and ByteDance’s Jinri Toutiao. Sina also has a small but rapidly growing online loan and payment business.
Weibo contributed 80% of its revenue last year, which grew 3% year-over-year to $ 2.2 billion. But advertising sales for Weibo, which has more than 500 million monthly users, plummeted during the coronavirus pandemic.
Thomas Chong, analyst at Jefferies, said Sina’s business was “affected by Covid-19 and has intensified competition in the industry.”
“The Chinese Internet business is being privatized and secondary listings this year with Changyou privatized by its parent company Sohu earlier and 58.com is being privatized,” Chong added.
Mr. Chao, who has been with the company since 1999, owned 13.5% of Sina’s shares with 58.6% of the voting rights as of March 31. Sina said a special committee of three independent directors would assess the proposal.
Management teams in China have in the past capitalized on the valuation differential between the US and Chinese markets. At the end of 2015, Qihoo 360 was privately owned and quickly listed in Shanghai with a higher valuation.
A new bill passed by the US Senate in May could force Chinese companies to write off if they do not meet US accounting standards. The bill prompted many of these companies to consider listing in Hong Kong or going private.
So far this year, NetEase and JD.com, both listed in the United States, have launched secondary listings in Hong Kong, and the city’s bankers have told the FT that they are approaching nearly all eligible companies for. assess their interest in a similar initiative.
Sina raised $ 68 million in its 2000 public offering and was one of the first Chinese companies to use a variable interest entity structure, allowing a Cayman Islands-based offshore company to control its operations. operation on the continent through a complex system of contracts.