Online cosmetics firm Jumei privatizes, citing undervaluation and shift in strategy

Chen Ou, Jumei CEO
Chen Ou, Jumei CEO

The board of Jumei (JMEI), a NYSE-listed online seller of cosmetics and lifestyle products, has received a proposal for privatization from its CEO and Chairman Chen Ou, Director and Vice President of Products Dai Yusen, and investor Sequoia Funds.

Jumei is preparing to sell at the price of seven USD per ADS. It started to buy back stock from its holders in December. In the next 12 months, it will buy back up to USD 100 million worth of stock.

The reasons for privatizing, according to CEO Chen Ou, are because the company is undervalued in the market and to make it easier for the company to shift its direction to increase competitiveness.

Jumei has already seen many shifts in its direction since it was listed in March 2010. It started out as a group-buying platform for cosmetics, then turned to B2C e-commerce in 2013 as an open platform. It started its cross-border e-commerce business in 2014. After meeting with problems with counterfeit products, it shifted again into direct sales in 2015.

The company’s history in the US stock market has been rocky, with accusations of faking financial accounts and misleading investors on top of concerns about counterfeit products. At its highest, Jumei stock reached close to USD 38 in August 2014 after its initial listing at USD 22 per stock. In the past month, shares dropped between five and six USD, according to online news portal Huxiu.

(Photos from Baidu Images)

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