A consortium of investors backed by Warburg Pincus is in in in-depth talks to value 58-year-old son-in-law ,NYSE: WUBA, Bloomberg said today, citing people familiar with the matter. People familiar with the matter said the consortium could announce the deal as early as this week, making it one of the biggest privatisations this year.
In addition to Huaping’s investments, the group includes private equity firm General Atlantic, Ocean Link Partners Limited and 58 Tongcheng Chairman and CEO Yao Jinbo.
People familiar with the matter said the consortium was working with a special independent commission at 58 city to finalize the details of the deal, including the final offer. In addition, the consortium has secured a funding led by a Chinese bank to finance the transaction. People familiar with the matter also said the final offer could be slightly higher than the consortium’s initial all-cash offer to buy all of 58 Ofis on issued American Depositary Shares (ADS) at $55 a share.
On April 2 this year, 58 Tongcheng announced that the Company’s Board of Directors had received a non-binding offer from Guyuan Investment to acquire all outstanding shares at a $55/ADS offer.
On April 30, 58 Tongcheng announced the latest developments in privatization, saying that the company’s board of directors had received non-binding privatization offers from Warburg Pincus Asia LLC, General Atlantic Singapore Fund, Ocean Link Partners Limited and Yao Jinbo, chairman and CEO of the company. It plans to acquire all of 58 of Tongcheng’s outstanding shares in cash of $27.50 per common share (equivalent to $55 per American Depositary Stock).
If a final privatization deal is reached this time, it would mean that the two sides would finally reach an agreement after more than two months of negotiations. Based on estimates by Bloomberg, the deal is valued at about $8.2 billion at $55 per ADS.
According to the relevant documents, 58 Tongcheng founder Yao Jinbo through its two-tier equity structure, effectively control the company’s voting rights of about 42%. Technology giant Tencent Holdings Ltd. owns more shares but controls about 28 percent of the voting rights.
The report said the privatisation proposal had met with opposition from a number of small investors, including Coronation Fund Managers, Aberdeen Standard Investments and Carmignac Gestion, which said it grossly underestimated the value of the 58-city business.
People familiar with the matter also stressed today that talks between the two sides could still be delayed or broken down, and no final decision has been made. 58 Tongcheng and General Atlantic have not responded to Bloomberg’s requests for comment, while Huaping Investment, Gurong Investment and Tencent declined to comment.