Bloomberg News previously reported that Chinese regulators are considering severe and perhaps unprecedented penalties for Didi, including forcing it to delist.
After the Wall Street Journal reported that the company was considering privatization to appease Chinese regulators and compensate investors for losses, Didi’s global share price soared.
The newspaper quoted people familiar with the matter as saying that the Beijing-based company has been discussing with bankers, regulators and major investors how to resolve the regulatory dilemma since its listing. According to the report, one of the options may involve a tender offer for publicly traded stocks.
The stock once soared 49%, but after Didi said on its social media accounts that reports about its privatization were false, then it gave up the gains.
Bloomberg News reported last week that Chinese regulators are considering severe and perhaps unprecedented penalties for Didi, including forcing it to delist.
According to people familiar with the matter, Beijing may impose stricter sanctions on the ride-hailing company than on Alibaba Group, which was fined US$2.8 billion after months of antitrust investigations and agreed to take measures to protect merchants and businesses. customer. Everything is said.
They said that regulators are weighing a range of potential penalties, including fines, suspension of certain businesses or the introduction of state-owned investors.
Before Thursday, after Beijing announced that it would investigate the company and remove its services from the Chinese app store, Didi’s share price had fallen by more than 36% from its issue price. With the opening of the New York market, stocks listed in the United States rose by 14%.
Bloomberg Intelligence said this:
In our view, privatizing Didi at or close to its IPO price may be the company’s best way to resolve regulatory issues and appease investors. Privatization will enable Didi to remove regulatory concerns from the public’s view, and may eventually lead to listings in locations that Chinese regulators consider more favorable for sensitive companies such as Hong Kong.
— Matthew Kanterman and Tiffany Tam, analysts
According to the Wall Street Journal, some or most of the funds raised by Didi from investors in the initial public offering can be used to fund the privatization offer. A person in the report said that the company’s price to investors has not yet been determined, but it may be close to or higher than the IPO price of $14 per share. The company has started considering a privatization plan in mid-July.
The Wall Street Journal quoted one of the people familiar with the matter as saying that the China Cyberspace Administration of China supports the privatization plan in principle. The person familiar with the matter said that SoftBank Group is unlikely to provide funding for the transaction. Representatives of Didi, SoftBank, CAC and the bank did not immediately respond to the Wall Street Journal’s request for comment.
Bloomberg reported last week, citing people familiar with the matter, that regulators are weighing a range of possible penalties, including fines, suspension of certain businesses or the introduction of state-owned investors. Didi’s US stocks may also be forced to delist or withdraw, although it is not clear how this choice will proceed.
People familiar with the matter said that regulators largely support the idea of ??an IPO, but since at least April, they have expressed concerns about Didi’s data security practices. People familiar with the matter said they urged Didi to ensure its data security before conducting an IPO, or to move its location to Hong Kong or mainland China where disclosure risks are lower. They said that although regulators have not explicitly prohibited the company from listing in the United States, they believe that Didi does understand the official instructions.
