21Vianet Going-Private Bid Withdrawn; Company Sets Buyback

  • Chinese data carrier received buyout offer in September 2014
  • Stock swings between gains and losses in U.S. trading

21Vianet Group Inc., the Chinese data carrier that has lost more than half its market value since April, said the buyer group that proposed to take it private has withdrawn the offer.

The American depository receipts fluctuated between a decline of as much as 6.9 percent and a 6.5 percent gain after the announcement, driving historical 50-day volatility to the highest level since November 2014. Trading volume of 5.7 million shares on Thursday was about 3.4 times the daily average of the past three months.

21Vianet is one of 51 U.S.-listed Chinese companies that have received going-private offers since January 2015, a trend that has been driven by the prospect of getting better valuations by moving to mainland exchanges. So far, 15 of the transactions have been completed, and concern has been mounting that others will be scuttled as China’s securities regulator increases scrutiny of the deals and considers measures to curb the flow of overseas companies seeking so-called backdoor listings in the domestic market.

“There probably is a realization that the going-private deal will take much longer than anticipated and will be a more complicated process than initially thought, so the company will probably do this at some point later,” Derek Yan, a research analyst at KraneShares, which oversees four China-focused exchange-traded funds that invest in stocks including 21Vianet, said by phone from New York. “There are too many U.S.-traded companies wanting to list in China, so the current situation puts a lot of pressure on the regulators.”

The group that offered to buy out 21Vianet withdrew its non-binding going private proposal dated June 10 immediately, “after a careful consideration” of current conditions, the company said in a statement on Thursday. The group, which includes 21Vianet co-founder and Chairman Josh Sheng Chen, a year ago proposed to buy out all of the outstanding shares for $23 apiece.

21Vianet also said Thursday that its board of directors has authorized a $200 million share repurchase program. The ADRs sold for as little as $9.02 on Thursday, below their 2011 initial public offering price of $15. They rose 5.4 percent to $10.21 at the close in New York.

Last month, a group led by an affiliate of Tus-Holdings Co. agreed to make a $388 million investment in 21Vianet, purchasing stock for the equivalent of about $16.27 per ADR. The purchase of newly issued class A and class B shares gives it a 21 percent ownership stake and 51 percent of the voting power, the company said in a statement.

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