Bitauto Stock Soars 8% on Buyout Bid From Tencent

At $16 per share, the buyout offer represents a 16 percent premium to the closing price on Thursday.

Belinda Zhou
    Sep 13, 2019 12:00 PM  PT
Bitauto Stock Soars 8% on Buyout Bid From Tencent
author: Belinda Zhou   

The stock in China's automotive service provider Bitauto Holdings Ltd. (NYSE: BITA) was trading up 8 percent on Friday afternoon, at $14.89 per ADS, after the company announced that it has received a buyout offer from Tencent Holdings Ltd. (HKEX: 0700) and Hammer Capital Opportunities Fund L.P.

The Beijing-based company said in a statement today that the parties have proposed to acquire all its outstanding shares at $16 per American depositary share. That represents a 16 percent premium to the closing price on Thursday. Bitauto will form an independent committee to consider the deal, it added.

Three significant shareholders in Bitauto, with an aggregate stake of 49 percent, have supported the transaction, according to the report. These include individual investor Bin Li, Global Investment Ltd. and Cox Automotive Global Investments, Inc. Global, an entity of e-commerce giant Inc. (Nasdaq: JD) holds 25 percent equity in Bitauto.

Tencent owns a stake of approximately 8 percent in Bitauto, while Hammer Capital is a new participant. The two said in the proposal letter that the going-private transaction would be funded via a combination of new and rollover equity capital without debt financing.

Bitauto reported that its revenue in the second quarter reached $406.6 million, up 9 percent year-over-year. Its net loss hit $19.8 million in contrast to income of $4 million a year ago.

Bitauto owns 44 percent of shares in its automotive financing arm Yixin Group Ltd. (HKEX: 2858). If the deal is completed, the control of Yixin will be changed. Yixin's stock, listed in Hong Kong, was on a temporary trading halt on Friday. On Thursday, it closed at HK$1.71 apiece. 

For the three months through June, Yixin reported revenue of $218.5 million and net income of $600,000 in a statement earlier this month.

"We are confident in building Bitauto into China's top online automobile media and transaction services platform as we continue to focus on our core business strategies," Bitauto's chief executive officer, Andy Zhang, said at the time.