On Wednesday, Chinese VC iMeigu announced its preliminary non-binding proposal to acquire NYSE-listed online bookseller Dangdang for USD 8.8 per American Depositary Share (ADS).
Asset management company iMeigu, which invests in the internet industry in China, will set up an acquisition company for the deal funded by various parties including investors and banks, reported China Business Network.
Liang Jian, the founder of iMeigu, told Chinese media they plan to acquire Dangdang “because the price is good”.
The deal is indeed tempting. Founded in 1999 and listed in 2010, the Amazon-like e-commerce platform Dangdang is widely known as an online bookseller in China. But in Q1 2015, it saw a net loss of RMB 58 million (USD 9.3 million).
The deal follows an insider buyout proposal in July from Dangdang’s chairwoman Yu Yu and CEO Li Guoqing. The proposal from the couple, who together hold 83.5% of the voting rights, failed to appeal many of Dangdang’s shareholders, as USD 7.8 is not even half of the USD 16 per ADS the company was worth when it was listed in 2010, reported Xinhua News. USD 8.8 per share from iMeigu is 12.6% higher than the price named by Yu and Li.
However, whether the buyout will work has yet to be seen.
Dangdang is among a list of Chinese tech companies who are planning to privatize. Among them are Chinese online cosmetics giant Jumei and China’s largest dating app Momo. Chinese search engine giant 360 and AirMedia (AMCN) also announced their respective plans to privatize in March.