Momo Inc (陌陌) shares rose the most in five weeks after the Chinese mobile social networking platform said a group led by its CEO had offered to take the company private.
The firm’s American depositary receipts (ADRs) rose 9.9 percent to US$17.24 in New York, leading gains in a Bloomberg index of the most-traded Chinese stocks in the US. Cofounder and CEO Yan Tang (唐岩) and investors including Sequoia Capital China Investment Management LP (紅杉資本) offered to buy all of Momo’s outstanding ADRs for US$18.90 each in cash, a premium of about 20 percent to the closing price on Monday.
The US$3.3 billion company joins a record 23 other China-based firms with US listings that have received buyout offers this year, as growing valuations in China’s domestic stock markets lure firms trading overseas back home.
The companies that seek to leave US exchanges believe that “they are not being fully appreciated by US investors,” Summit Research Partners analyst Henry Guo (郭琪) said.
They expect to have “better dialogue and communication” with Chinese investors, Guo said by telephone on Tuesday. “Momo’s business model is really unique and it’s difficult for US investors to understand it, so it makes sense for them to go back to China.”
This year’s go-private deals, which have a total value of US$25 billion, are offering investors a 23 percent premium over the companies’ average trading prices prior to their announcements, the lowest since 2010, according to data compiled by Bloomberg.
Almost 60 percent of the bids were below the targeted firms’ initial public offerings (IPOs). Momo sold shares at US$13.50 each in an IPO on the NASDAQ in December last year.
San Francisco-based ABR Investment Strategy CEO Brad Gastwirth said it makes sense for fast-growing companies like Momo to entertain an offer to delist, because “when they are private, they can focus on long-term growth, freeing up the time and effort they would otherwise spend dealing with public investors.”
He expects more companies with a similar growth profile to receive buyout offers.
Meanwhile, Luo Haijian (駱海堅), the CEO of China’s 4399 Co, an online gaming company, was accused by the US Securities and Exchange Commission (SEC) of trading on illegal tips before the June 17 announcement that Qihoo 360 Technology Co (奇虎360) had received a takeover offer.
The SEC alleged that Luo, 33, a citizen of China, made more than US$1 million in the “remarkably timed purchase” of Qihoo call options shortly before news of the buyout offer was disclosed, according to a suit filed on Tuesday in the Manhattan federal court.
The SEC said it obtained an emergency court order on Tuesday freezing Luo’s profits in a US brokerage account and prohibiting him from destroying evidence while regulators conduct their investigation.
“The suspicious timing and size of Luo’s trades spurred us to move swiftly to freeze his proceeds and ensure that potentially illegal profits cannot be siphoned out of this account beyond a US court’s jurisdiction,” SEC New York office head Andrew Calamari said.
Luo on Monday instructed his brokerage firm to wire US$600,000 to a bank account in Singapore, according to the SEC.
Chinese Internet-security company Qihoo, whose businesses include operating Web games, received a takeover offer of US$77 in cash per ADR, valuing the company at about US$10 billion, from investors including Zhou Hongyi (周鴻禕), its chairman and CEO.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to