Alibaba Joins Momo Buyout Group, Sparking Record U.S. Rallyby
Chinese dating app maker rallies most since 2014 IPO
Momo ADRs have more than doubled from record low in February
Alibaba Group Holding Ltd.’s finance affiliates have joined the group seeking to buy out Momo Inc., sparking a record rally in the Chinese dating app maker’s stock.
Momo surged 34 percent to $16.09 in New York on Wednesday, the biggest gain since its December 2014 initial public offering in the U.S. Trading volume of 15 million shares was more than 10 times the full-day average of the past three months.
The American depositary receipts rallied after a regulatory filing showed that Alibaba affiliates are backing a buyout of Momo that Chairman and Chief Executive Yan Tang proposed last June, just six months after raising $248 million in the IPO. The ADRs had slumped to a record low on February 12 as speculation mounted that the deal wouldn’t go through. Later that month Momo named Alibaba’s co-founder Joseph Tsai to its board as a director.
“Today’s announcement renewed hopes of Momo’s privatization,” Henry Guo, a San Francisco-based analyst at Investment Technology Group, said by phone. “With Alibaba on board it shows that money is no longer a problem.”
Investors are also speculating that Weibo Corp. may become a buyout target for Alibaba after Momo, according to 86Research Ltd. The shares of China’s Twitter-like social-media service advanced 13 percent to $20.32, the highest since Dec. 23.
“It is possible that Alibaba will acquire Weibo because the company will fit into its media strategy,” Juan Lin, Shanghai-based analyst at 86Research, who covers U.S.-listed Chinese stocks, said by e-mail.
Alibaba’s U.S. spokesman Bob Christie declined to comment on questions about the company’s acquisition strategy.
Only seven of 40 U.S.-traded Chinese companies that have proposed delistings from American exchanges in the past 12 months have completed the process, according to data compiled by Bloomberg, as a volatile mainland stock market and the economic slowdown in China have reduced the attractiveness of a local listing.