With Chinese tech companies increasingly coming under heightened scrutiny in the United States, the Chinese online media firm Sina Corp. has decided to exit Wall Street after being listed there for 20 years.
Sina said in a statement that in a deal that values the company at $2.6 billion, the company, which is head quartered in Beijing, is being taken private by its chairman and chief executive, Charles Chao.
The offer price of the company of $43.30 per share is an almost 8% premium to the closing price of the company’s stocks in New York on Friday. It is also greater than the initial buyout offer made in July by Chao’s investment company – New Wave Holdings.
Sina got itself listed on the Nasdaq in 2000. Weibo, a popular social media platform in China often compared to Twitter, is owned and operated by the company.
This decision by Sina and its deal comes at a time of increased tensions between the United States and China. US threats and restrictions against Chinese tech companies that have targeted apps like TikTok and WeChat and chipmaker SMIC have increased tensions between the countries in recent weeks.
There is also greater scrutiny of Chinese companies on Wall Street. For example, after the disclosure of massive accounting irregularities, Luckin Coffee was booted off the Nasdaq. Since then, steps aimed at limiting access of Chinese companies to America’s vast capital markets have been taken by US lawmakers, government agencies and stock exchanges.
A bill was passed in the US Senate unanimously in May which was aimed to prevent companies that refuse to open their account books from getting listed on Wall Street. The goal of the bill is to “kick deceitful Chinese companies off US exchanges”, said the bill’s bipartisan co-sponsors. The bill still needs to pass the US House of Representatives.
A report that recommended increased scrutiny of listed Chinese companies and requirement for due diligence for investing in Chinese companies was released in August by the US President’s Working Group on Financial Markets.
In recent months, secondary listings in Hong Kong and Shanghai have been offered by a number of marquee Chinese tech firms as they are concerned about possible regulatory trouble in the United States, as well as because of their intention to be closer to the investors who actually use their products. E-commerce companies Alibaba and JD are among those companies.
On the other hand, a dual listing in Shanghai and Hong Kong exchanges as opted for by the highly anticipated initial public offering of Alibaba’s financial affiliate Ant Group. It need ot be mentioned that a record IPO was witnessed by Alibaba on the New York Stock Exchange in 2014.
“Chinese companies currently listed in the US will continue a stampede to issue secondary shares in Hong Kong and domestic markets, and these markets will also be the main destinations for new listings by Chinese companies,” Eurasia analysts wrote in a note last month.
(Adapted from CNN.com)