Caixin
Jul 07, 2020 04:04 AM
BUSINESS & TECH

Sina Considers CEO’s Buyout Bid Valuing Company at $2.7 Billion

Sina Chairman and CEO Charles Chao proposed to acquire the company for $41 a share.
Sina Chairman and CEO Charles Chao proposed to acquire the company for $41 a share.

Sina Corp.’s CEO and controlling shareholder, Charles Chao, proposed to take the company private in a deal valuing the Chinese online media company at $2.7 billion, Sina said Monday.

The preliminary, nonbinding buyout bid came from New Wave MMXV Ltd., a company controlled by Chao, who is also known as Cao Guowei. Sina said its board formed a special committee to evaluate the deal. The company said there can be no assurance that any definitive offer will be made.

New Wave proposed to buy the shares it doesn’t already own for $41 each, or 11.8% above Thursday’s closing price of $36.67. Sina’s shares surged more than 10% Monday to $40.54 on the Nasdaq stock exchange in New York. Sina went public on Nasdaq in 2000 at an initial price of $17 a share. Its Twitter-like microblogging unit Weibo is also listed on Nasdaq. Chao is chairman of both Sina and Weibo.

Chao held 12.4% of Sina as of November 2017, according to a regulatory filing. But under a share subscription agreement between Sina and New Wave in November 2017, Sina issued New Wave 7,150 newly created Class A preference shares with 10,000 votes per share, giving New Wave 55.5% of the Sina voting power, according to the filing.

The buyout proposal is part of a series of going-private deals involving U.S.-listed Chinese companies as the U.S. moves to crack down on Chinese companies on American stock exchanges. So far this year, U.S.-listed Chinese companies have announced four such deals with a combined value of $8.1 billion including debt, according to data compiled by Bloomberg.

Last month, China’s biggest online classified company 58.com Inc., listed on the New York Stock Exchange, agreed to a buyout deal led by private equity firms Warburg Pincus and General Atlantic. Car comparison website Bitauto Holdings Ltd. also agreed to be taken private.

In April, Chinese online cosmetics retailer Jumei International completed a merger with its parent company and delisted from the New York Stock Exchange. Also in April, Nasdaq-listed Chinese online gaming company Changyou.com was taken private by parent Sohu.com Ltd.

The movement is picking up steam as U.S. President Donald Trump weighs tighter scrutiny of Chinese companies after a string of accounting scandals including Luckin Coffee Inc.’s financial reporting fraud. The U.S. Senate passed a bill in May that could essentially ban many Chinese companies from listing their shares on U.S. exchanges if they do not comply with certain transparency regulations. The measure is pending a vote in the House of Representatives.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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