Twitter-like platform under scrutiny amid sources’ claims that company chiefs want to delist from Nasdaq amid pressure from US and China
(AF) The chairman of Weibo, China’s Twitter-like social media platform, has scotched reports that he plans to take the Nasdaq-listed company private.
Charles Chao said he had informed the firm that he had no discussions with anyone regarding taking the Weibo private.
Reuters had earlier reported that he and a state investor were in talks to take the company private in a deal that could value it at more than $20 billion.
The mooted move, which may be influenced by China’s crackdown on local tech companies over data retention, comes days after cybersecurity officials forced ride-hailing firm Didi Chuxing to take down its app. The order was accompanied by an investigation into Didi’s handling of customer information. Just days earlier, Didi’s raised $4.4 billion in a US IPO.
Chao’s holding company New Wave, Weibo’s top stakeholder, is teaming up with a Shanghai-based state company to form a consortium for the deal, three sources said, without disclosing the state firm’s identity.
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The consortium is looking to offer about $90-$100 per share to take Weibo private, two of the sources said, representing a premium of 80%-100% to the stock’s $50 average price over the past month.
The group aims to finalise the deal this year, they said.
Reuters reported in February that Weibo had hired banks to work on a Hong Kong secondary listing in the final half of 2021. Sources said this is no longer the plan.
Shares in Weibo, which operates a platform similar to Twitter, surged more than 50% in pre-open trade after the Reuters report before gaining more than 10% in early New York trade.
Weibo cited Chao as saying he had had no discussion with anyone regarding delisting the company.
Weibo and Alibaba did not respond to Reuters requests for further comment.
Alibaba link
Yet three separate sources with knowledge of the matter told Reuters the plans stem from Beijing’s drive to have Alibaba Group Holding and affiliate Ant divest their media holdings to rein in their sway over Chinese public opinion.
All the sources declined to be named due to confidentiality constraints.
Alibaba held 30% of Weibo as of February, the latter’s annual report showed, which was worth $3.7 billion as of Friday’s close.
Beijing has looked to rein in Chinese billionaire Jack Ma’s Alibaba business empire by unleashing a series of investigations and new regulations since last year.
The crackdown followed Ma’s public criticism of regulators in a speech in October last year and has swept across China’s money-spinning internet sector in recent months.
E-commerce giant Alibaba has invested in nearly 30 media and entertainment firms including Hong Kong’s flagship English-language newspaper South China Morning Post, Refinitiv data shows.
Tighten control
Chao’s mooted deal would likely see it exit Weibo, two of the sources said.
The plan also reflects China’s efforts to tighten control over private media and internet businesses, sources added.
US-listed Chinese firms also face heightened scrutiny and potentially stricter audit requirements from US regulators, amid political tensions between Beijing and Washington.
A number of Chinese companies have already opted out of American stock exchanges by going private or returning to equity markets closer to home via second listings.
There were 16 announced delistings of US-listed Chinese companies worth $19 billion last year, Dealogic data showed, compared with just five such deals worth $8 billion in 2019.
China’s cabinet said on Tuesday that it would step up supervision of firms listed offshore citing the need to improve regulation of cross-border data flows and security.
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Reporting by Reuters
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