Alibaba's shares rocket 42pc
Mainland e-commerce giant Alibaba Group saw the share price of its Hong Kong-listed flagship, Alibaba.com, soar yesterday after it offered to privatise the company and buy out minority investors for about HK$19.6 billion in cash.
Alibaba.com's stock rose 42.7 per cent to finish at HK$13.20 in the first day of trading since it was suspended on February 9. That was the share price's highest close since reaching HK$13.24 on June 1 last year and the biggest percentage jump in more than four years. Its all-time highest close was at HK$38.68 on November 30, 2007, barely three weeks after the company's initial public offering.
Hangzhou-based Alibaba Group, which is controlled by founder and chairman Jack Ma Yun, offered HK$13.50 per share in cash, 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.
'Some people suggested that we buy back the shares at a lower price, but this is not how Alibaba operates,' said Ma in an internal e-mail obtained from a person familiar with the matter. This message was addressed to 'Aliren', which refers to all of the group's 25,000 employees worldwide, and released hours after the privatisation plan was announced in a filing with the Hong Kong stock exchange on Tuesday.
'We are thankful to all the Alibaba.com colleagues and loyal shareholders who have constantly supported us,' Ma said. 'We have decided to express our appreciation and respect with the sincerest and fairest-possible means for your support over the past four years since we listed.'
Alibaba Group, which owns about 73 per cent of its listed subsidiary, will finance the privatisation from a combination of new committed financing and cash on hand. In documents filed with the Hong Kong stock exchange, the privately held firm said funding had been lined up from a consortium of banks that included Australia and New Zealand Banking Group, the Singapore branch of Credit Suisse, DBS Bank, the Singapore branch of Deutsche Bank, HSBC and the Hong Kong branch of Mizuho Corporate Bank.
'We believe the privatisation deal stands a chance of succeeding at HK$13.50, given that it represents a premium of 45.9 per cent over the last closing price and 61.3 per cent over the 120-trading day average price,' said Connie Gu, an analyst at Bocom International Securities. She said it also represented 'an opportunity for public shareholders to cash out, given Alibaba.com is facing a challenging business outlook'.
Alibaba.com - the world's largest business-to-business e-commerce-services provider, with 76.3 million registered users in 240 markets worldwide - connects small- and medium-sized firms that have little or no marketing budgets with buyers on vast trading websites.
In his e-mail, Ma said a 'business upgrade' on all Alibaba Group subsidiaries 'will involve broad, complex and large-scale mechanisms, and will undoubtedly have a significant impact on Alibaba.com's profitability over the next few years'.
Registered users that e-commerce service Alibaba.com has in 240 markets worldwide