For the public Media privatization invitation, the market reaction "gratifying"

Absrtact: In recent 8 years, the market capitalisation of about 3.3 billion U.S. dollars in the media (NASDAQ:) issued before the opening announcement of the U.S. stocks, including the Chairman of the board, Jason, the consortium launched a privatisation invitation, the latter plan to pay for each U.S. depository Receipts (ADR) cash

In the nearly 8-year market, the market capitalisation of about 3.3 billion U.S. dollars in the media (Nasdaq:) to the U.S. stocks before the opening announcement that has received a consortium, including the Chairman of the board, Jason, launched a privatisation invitation, the latter plan to each U.S. stock depository Receipts (ADR) pay cash 27 dollars.

For the Public Media privatization solicitation, the market reaction "gratifying", the stock price 13th the opening rose 10%, rose to 25.8 U.S. dollars. However, "the media to be privatized, even two of shareholders have said they do not know beforehand." The stock price burst rises, form with before the public goods food, global world privatization situation. Both were suspected of insider trading being investigated by the SEC. "A pseudonym, a market person who has long observed U.S. stocks," said. On the other hand, the purchase price did not "please" the original small investors. "Its price is too low, not for the best interests of small and medium-sized shareholders, breach of board trust obligations." "A media investor who asked for anonymity in the US said to reporters.

Chinese and American lawyers are now working together to investigate the company and solicit investors to launch a class action lawsuit. Lawsuits have made it a more volatile way to privatize the media. As a result, the huge costs of lawyers ' litigation will not only aggravate the burden on the distribution of the public, but may also cause considerable obstacles to future privatization.

What really benefits from privatisation schemes may not be the Chinese companies that are in the public sector. "Before 2006, Chinese companies had to go overseas, even if they broke their heads, at that time, many overseas organizations came to China to search for potential listed companies, trying to pull them to overseas markets, big and small exchanges, law firms, investment banking companies are figuring out how to list the Enterprise packaging, now in the stock company to privatize the problem of trust, These institutions have discovered new business opportunities, and they want to gain a lot of benefits from privatization, "said Yang Xing, PhD advisor at Jinan University's finance department."

Price differential

"We have absolutely no thought about privatization. In November 2011, Jason in a conference call to respond to muddy water questioning.

At that time, the independent director of the media, Jingwei Creative Investment Management partner Zhang Ying has comforted Jiangnan spring, "there will be more and more in the future of the stock companies to choose privatization, then the domestic listing, this is a trend, but also inevitable." ”

In less than a year, the consortium, Jason, chairman of the Board, launched an invitation to privatize the media, while the company's second largest shareholder was "unaware". It is noteworthy, however, that the volume of the company's call options rose to its highest level since November 2011, before the offer was issued. According to public data, August 10, the number of media call options to reach 29,000 hands, for nearly 4 weeks average level 5 times times, the same day Rose 7.6%, the biggest increase since February 1.

A call gives an investor the right to buy a stock at a given price before a certain date, presumably when a trader buys a company that buys a call.

"There may be a leak," said Huang, a rich Hong Kong-based asset Management director. "It's suspicious, but I don't think anyone who deals in call options knows the news," he said. There may be people who use the monitoring system and follow suit to buy options. "Before CNOOC announced a 15.1 billion dollar takeover of Canadian Nexen, there was a similar sharp rise in the volume of bullish contracts in Nexen, which led to scrutiny by the Securities and Exchange Commission (SEC) of insider trading charges against some of the people involved in CNOOC. Coincidentally, 2011-2012 announced the privatization of the public goods and the world, has been in the privatization of the invitation after the formation of heavy volume rose, after the SEC was accused of insider trading. "From the line chart, the audience is similar to the two companies, but the conclusion requires the SEC to provide detailed evidence." Smith said to reporters.

Low pricing

It is more crucial to balance the interests of "on the table" than to the interests that may exist in the "table".

"The core and most important part of the privatization process is pricing in an offer," said a US investment banker who was a financial advisor to a number of companies, saying "whether the price is fair and reasonable is the basis for a final takeover deal." ”

In the successful privatization case, Alibaba Business-to-business and Shanda network overflowing value of 46% and 23.5% respectively, the Thai-rich electric premium 20%, Campeng Chemical premium 27%, global world Premium over 100%. By contrast, the 15% per cent premium offered by the media outlets has been referred to as "low" by some market participants, and "it does not preclude the possibility of the board raising the offer in the future negotiations". "According to our understanding, the current Jun Junbo media prepared to accept each ADR 27 U.S. dollars of the quotation is likely not the highest in the offer price," said a lawyer at Lehman law firm, a Chinese shareholder who has been acting on several occasions to participate in U.S. securities litigation. Lawyers in China and the United States are suing the company's board of trustees for violating the fiduciary duty to maximize shareholder benefits. "At present, we are working with the U.S. law firm to recruit Chinese investors, if the Chinese people do not agree to the media ready to accept the price, can join the class action, to seek compensation." "Jun Junbo said. "When the price is too low, investors can choose not to accept, if the refusal to accept more than a certain percentage of investors, will eventually lead to the privatization of the company failed." The whole process should belong to the market-oriented behavior, not to court. Luo, chief analyst of Ping An securities, said in an interview with reporters.

In response to the US-China lawyers ' plan to prosecute, the media responded that if the future really became a defendant, it would not be a problem for the audience, so there was no need for more response.

Privatization into an institutional feast

In addition to the major shareholders and small shareholders of listed companies of the main role of privatization, in the corporate retreat of the stock market, a large group of IR, law firms and financial institutions with foreign investment background are actively plotting, in this plan, the enterprise's enter and retreat are controlled by their palm. They are the real planners who have a pivotal role to play.

It said that Citigroup Global finance Asia, Credit Suisse Bank Singapore Branch and DBS Bank would also have a chance to participate in the "privatization" feast. For these foreign banks, it is a good financial investment to focus on today's profitability and the credibility of these five institutions.

For these investment institutions, if the division can successfully privatize and turn the board, it will get a higher P/E, the investment in the institutions even if the share of shares unchanged, can also be 2-4 times the premium. ' This is a big temptation for the current investment market: ' There are so few projects on the market now that there are too few of them, even if there is an IPO, the price and volume will not be great, ' said a head of a funding advisory body. "In fact, since 2011, the Chinese concept stocks in the US market have gradually started to privatize. Since 2012, there have been 4 cases involving VC/PE institutions, the source of the media behind the sources of capital, Carlyle, Citic Capital, Ding Hui, everbright Capital, Shanghua Medicine, the Thousand-party technology, and the Asia-Credit joint venture privatization program are TPG, its fund, CITIC Capital involved. The law firm is also an important participant in this gluttonous feast. In the United States, the process of privatization is highly legal, with a much higher standard of judgment than usual corporate business, from the start to the privatisation, where at least 6 or 7 law firms are involved; "Some of the earlier companies (the costs of privatization) cost tens of millions of dollars," he said. At least three to 5 million dollars will be needed to exit the city now. The main costs of privatization are financial advisers and legal advisers, while others include fees for independent directors, due diligence, substantial printing costs, and so on. The most important point is that privatization is not a success, and if it is unsuccessful, these costs are also to be paid, "said Chen Wenxuan, managing partner of Walt Finance Group." Investor Relations Management is also an essential part of many privatization situations. "Privatization is expensive," Robert Schechter, managing director of Longmen Financial affairs, which has handled many of the "tragedies" in China, said when chatting with reporters at the Wall Street summit in Beijing in May, "the process of privatization is 1, 2 years, or even years, in the case of a particular company, The overall cost is at least 3 million ". Unnamed executives told reporters that the U.S. IR company, often open mouth is million dollars of huge sums of money, "with this price, and the United States market ropes, the general still can save the company." But can "salted fish over", "or to see the company's performance and development," the executive said.

But the management of Chinese companies, not only because of the high cost of privatization, has been scrambling to announce privatisation plans, which are almost as lively as companies have been scrambling to go abroad a few years ago.

"We calculated that when the market went public, it was more than 60 million dollars and the flower was more than 30 million dollars, and it was profitable," said one executive who had been privatized in 2011 years. "Many enterprises are thinking of returning to the domestic a-share market or to Hong Kong, but in fact this is very difficult, first in the United States listed enterprise structure and domestic or Hong Kong is not the same, to come back, you have to split the original structure, which requires at least 2.5 of the time." Coupled with the cost of a new listing, companies do not necessarily end up benefiting, "Yang Xing said