Chinese auto vertical BitAuto (NYSE: BITA) is set to go private in a $1.1 billion deal with a consortium of investors led by Tencent. The move makes BitAuto the latest Chinese marketplace to consider leaving the turbulent U.S. stock market.

Last year, BitAuto received a proposal from Tencent to take the company private, leading BitAuto to form a committee to consider the offer.  Today, BitAuto announced that it had reached a deal with a consortium of investors, including Tencent-owned Morespark Limited and Hammer Capital.

BitAuto’s three largest shareholders — Li Bin, JD.com and Cox Automotive — which together own 48.5% of BitAuto’s equity, had previously agreed to the terms of the takeover bid. Tencent already owned a 7% stake in the company.

“The merger consideration represents a premium of 16.4% to the closing price of the company’s ADSs (American depository share) on September 12, 2019, and a premium of 35.1% to the average closing price of the company’s ADSs during the 30 trading days prior to its receipt of the going-private proposal,” the company said in a media statement.

The deal will also have an impact on global marketplace operator Prosus (and it’s largest shareholder Naspers), which owns some 30% of Tencent. The timing works well for Prosus, which has been making inroads into Asian markets over the past year through its investments in Southeast Asia-based horizontal Carousell and MENA-focused Emerging Markets Property Group.

As the U.S. stock market becomes increasingly unstable, publicly listed Chinese companies are exploring going private. In April, listings giant 58.com announced it would consider a buyout offer from Ocean Link Partners. Warburg Pincus Asia and General Atlantic later joined the offer. And last week, Fang, the publicly-listed Chinese real estate portal, began preparations to spin off its internet business.

While both 58.com and Fang are making the changes based on larger operational problems, the instability of the U.S. stock market, as well as a fraying economic relationship between China and the U.S., may be causing Chinese marketplaces to look elsewhere for funding. Flush with cash, private equity and other private investors are looking like an increasingly stable bet. Other Chinese marketplaces listed in the U.S. include 51Job and AutoHome.

BitAuto is widely considered the No. 2 auto vertical in China, trailing auto listings giant AutoHome. In FY2018, BitAuto surpassed RMB10 billion ($1.5 billion U.S.) in annual revenue for the first time, making it the largest revenue-generating publicly-listed auto marketplace in the world.

The merger is expected to close in the second half of this year and is subject to standard closing conditions, including a vote from shareholders.

Print Friendly, PDF & Email

Related Articles