Alibaba offers HK$19.6b to buy out HK investors
Alibaba Group, the mainland's largest e-commerce company, yesterday offered to take its Hong Kong-listed subsidiary Alibaba.com private for up to HK$19.6 billion in cash.
The Hangzhou-based company is offering HK$13.50 per share to minority shareholders, which implies a 60.4 per cent premium over the 60-day average closing price of Alibaba.com shares and a 55.3 per cent premium over the 10-day average closing price.
The company, along with other parties in this proposal, own 73.45 per cent of Alibaba.com.
The listed firm, the world's largest business-to-business e-commerce service provider, yesterday reported a 6 per cent year-on-year fall in fourth-quarter net profit to December to 385.9 million yuan (HK$475.1 million). Revenue rose 9 per cent to 1.66 billion yuan.
For the full year, net profit rose 16.6 per cent to 1.71 billion yuan from 1.47 billion yuan. Turnover grew 15.5 per cent to 6.42 billion yuan.
'Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company,' said Alibaba founder Jack Ma Yun, the chairman of both companies.
'With this offer, we provide our shareholders a chance to realise their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition.'
Since November 6, 2007, when Alibaba.com was initially offered to the public at HK$13.50 per share, the Hang Seng Index has declined more than 27 per cent.
In its filing with the Hong Kong stock exchange, Alibaba said its offer price would not be increased, following the city's regulations. A privatisation scheme document will be sent to Alibaba.com shareholders.
Alibaba said it intended to finance the privatisation with a combination of new committed financing and cash on hand.
Reports yesterday said the group had secured a US$3 billion loan from a syndicate of banks.
An independent board committee of Alibaba.com has been formed to evaluate the proposal and will work with its own independent financial adviser, Somerley, to formulate recommendations to independent shareholders.
Alibaba's financial advisers are Rothschild, Credit Suisse and Deutsche Bank. HSBC is advising Alibaba.com.
'We think that privatisation is a reasonable decision for Alibaba Group because Alibaba.com's business-to-business e-commerce operations have been undervalued by the market,' said Huang Meng, an analyst of market research firm Analysys International. 'After privatising this subsidiary, listing the whole group in future may create more value.'
Alibaba spokesman John Spelich, however, said the company had no plans for an initial public offering. 'No matter if the privatisation of Alibaba.com succeeds or not, an IPO for the group is a matter several years into the future,' he said.
Additional reporting by Sophie Yu
The price, in HK dollars, at which Alibaba.com shares were last traded before they were suspended