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As China stocks roil, online retailer Dangdang gets a buyout offer

July 9, 2015 03:47 PM
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(Bloomberg)—Online retailer E-Commerce China Dangdang Inc. and Chinese social networking site YY Inc. received buyout offers from their managers after U.S.-listed Chinese shares tumbled along with those at home.

Chairman Jun Lei and CEO David Xueling Li offered $68.50 in cash for each of YY’s American depositary shares, according to a company statement Thursday. Dangdang Chairwoman Peggy Yu Yu and CEO Guoqing Li offered $7.812 per ADS in cash, according to a statement.

“The management of YY and Dangdang really believe this is a perfect bargain time to take the companies private,” Henry Guo, an analyst at Summit Research Partners, said in an email. Dangdang is No. 10 in the Internet Retailer 2015 China 500.

The two companies bring to 29 the number of China-based firms with U.S. listings that have received buyout offers this year. China’s Shenzhen and Shanghai benchmarks, along with a gauge of mainland companies trading in Hong Kong entered bear markets in past weeks, prompting the government to announce a series of supportive measures.

Chinese equities lost more than $3.9 trillion of value in less than a month as traders liquidated leveraged bets at an unprecedented pace. Shares rebounded Thursday, with the Shanghai Composite Index gaining 5.8 percent.

The Bloomberg China-U.S. index for the most-traded Chinese companies in the U.S. had declined 18% through Wednesday from this year’s peak on June 12.

Dangdang’s offer is at a 20% premium to Wednesday’s closing and YY’s offer is at a 17% premium. YY has fallen more than 25% since this year’s peak on June 12 and Dangdang has dropped more than 40% from its highest on June 17.

Dangdang, which sells everything from books to baby products, jumped 5.2% to $6.85 as of 1:30 p.m. in New York. YY is backed by billionaire Lei, who founded Chinese smartphone maker Xiaomi Corp., No. 2 in the China 500 and the world’s most valuable startup. YY rose 2.9% to $60.04 

 

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