Ambow Buyout Bid Scrapped as Solars Fall: China Overnight
Chinese stocks listed in New York fell, led by solar companies, while trading in Ambow Education Holding Ltd. (AMBOY) was suspended for a second day as a buyout offer for the education provider was withdrawn.
The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. slipped 0.2 percent to 92.08 as Trina Solar Ltd. (TSL) and Yingli Green Energy Holding Co. (YGE) sank more than 9 percent. Baring Private Equity Asia Ltd. terminated its March 15 offer for Ambow, saying the resignation of the Beijing-based tutoring company’s auditors and three directors made it impossible to proceed with the deal, according to a letter from Baring filed yesterday.
Baring’s withdrawal marks the first failed takeover valued at at least $50 million of a Chinese company in the U.S. since August 2011, when Themes Investment Partners terminated a bid for China Natural Gas Inc., data compiled by Bloomberg show. Ambow is the third Chinese company traded in New York to have a privatization bid scrapped since 2010. There have been 30 deals announced in that period, according to the data.
“Clearly people will paint it with a broad brush but I think Ambow is a special case,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages about $700 million of investments including Chinese stocks, said by phone from Lisle, Illinois. “Ambow has different business lines and it’s hard to find synergy. It’s a bit messier than the other education companies.”
Trina and Yingli slumped as the bankruptcy of Suntech Power Holdings Co., once the world’s biggest solar-panel maker, stoked stock volatility. Chinese solar companies listed in the U.S. will extend declines as Suntech’s situation ignites concern other firms are also over-leveraged, according to David Smith, manager of Gamco Investors Inc.’s Gabelli Green Fund, which sold out of Chinese solar equities before 2012.
Trina, a Guangzhou-based manufacturer that is the world’s third-largest maker of solar cells, sank 11 percent to $3.46, the biggest one-day decline since November. Baoding-based solar panel maker Yingli tumbled 9.7 percent to $1.96, the steepest slump since August.
American depositary receipts of JA Solar Holdings Co. (JASO), China’s largest solar-cell producer by capacity, dropped 11 percent to $3.71, the lowest level since December. The Shanghai-based company reported a net loss for the fourth quarter that exceeded analysts’ estimates as panel prices fell.
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., retreated 0.3 percent to $36.82 in New York, while the Standard & Poor’s 500 Index (SPX) dropped 0.3 percent to 1,551.69.
Baring, a private equity firm based in Hong Kong, proposed buying Ambow for $1.46 per ADR in a non-binding offer worth $74 million as of March 15.
Ambow tumbled 20 percent to a record-low 94.97 cents March 22 after saying a unit of PricewaterhouseCoopers LLP resigned as its auditor, citing concern a probe into allegations by former employees of financial impropriety won’t be given necessary resources and time. Ambow said March 18 that three of its directors stepped down amid differences with management over the investigation and corporate governance.
ADRs of Ambow have lost about 75 percent since July, when the company said that it was looking into claims of wrongful conduct related to the 2008 acquisition of a training school. The company operates schools and tutoring centers in China.
U.S. regulators probing potential fraud by nine China-based companies increased pressure on their auditors in December by formally accusing affiliates of the Big Four firms of withholding documents from investigators. The Securities and Exchange Commission hasn’t named the nine companies.
JPMorgan Chase & Co. was the biggest holder of Ambow’s U.S. stock as of Dec. 31, accounting for 9.9 percent of the outstanding shares, according to data compiled by Bloomberg. Toro Investment Partners LP held 8.1 percent of the shares, while Government of Singapore Investment Corp Pte had 5.2 percent.
Cnooc Ltd. (CEO), China’s largest offshore oil producer, rose 2.6 percent to $189.9 in New York, the biggest one-day gain in eight weeks. Analysts at brokerages including Mirae Asset Securities Co. and Bank of Communications Ltd. raised their recommendations on the stock to buy from hold.
China Petroleum & Chemical Corp. (386), Asia’s biggest refiner, advanced 1.3 percent to $115.06 in U.S. trading after saying that it expects more deals with its state-owned parent. The Beijing-based company announced a 50-50 joint venture with China Petrochemical Corp. to replace dwindling reserves with oilfields in Kazakhstan, Colombia and Russia.
Longwei Petroleum Investment Holding Ltd. (LPIH), an energy company based in China’s Shanxi province, tumbled 11 percent to 12 cents in New York after saying in a statement that it received a notice from the New York Stock Exchange that it may delist the company by April 1.
The Hang Seng China Enterprises Index (HSCEI) added 0.8 percent yesterday to 10,978 in Hong Kong, after slipping 1.1 percent last week. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares fell less than 0.1 percent to 2,326.72, paring last week’s 2.2 percent advance.
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