In a story first reported by Reuters, three sources close to JOYY Inc (Nasdaq: YY) and Xiamoi (HKG: 1810) in a deal that could value the firm at up to $8 Billion. JOYY’s top shareholders are Chairman David Li and Lei Jun, Xiamoi founder.
The pair believe the Chinese company is undervalued in the market. JOYY had an average market value of $3.9 Billion recently while net assets totalled $5.6 Billion as of June 30th quarterly results.
JOYY was founded in 2005 and went public in 2012 on the Nasdaq markets. The company also runs game-focused social media platform Hago as well as a 16% ownership stake in Chinese streaming video game platform Huya (NYSE: HUYA).
Recent 6 month performance for JOYY has seen the shares down over 50%. The Nasdaq Golden Dragon China Index which tracks Chinese firms has dropped 40% in comparison.
The NASDAQ Golden Dragon China Index is a modified market capitalization weighted index comprised of companies whose common stock is publicly traded in the United States and the majority of whose business is conducted within the People’s Republic of China.
The Index is designed to provide insight and access to the unique economic opportunities taking place in China while still providing the transparency offered with U.S. listed securities.
The Index divisor was initially determined to yield a benchmark value of 2,500.00 at the close of trading on September 30, 2003. The NASDAQ Golden Dragon China Index was created by, and is a trademark of, Halter Financial Group.
Li and Lei respectively own a total of 31% of the company according to the JOYY Annual Report filings with Li holding a 76% voting power position.
Completion of the deal would add to a growing list of Wall Street listed Chinese companies that have opted out of continuing in the United States markets either through returning to Chinese markets or private takeovers.
As indicated in the Global Dragon China index, the moves come after increased scrutiny and auditing requirements for United States listed Chinese companies after political tensions have risen between the countries.
Reuters also reported last month that Weibo (Nasdaq: WB) Chairman Charles Chao and a state investor were in talks to take Weibo private in a deal that could value the Nasdaq-listed Chinese equivalent of Twitter at $20 billion-plus.
There were 16 announced take-private deals of U.S.-listed Chinese companies worth $19 billion last year, Dealogic data shows, versus just five such deals worth $8 billion in 2019.
The price target offering is rumored to be between the range of $75 – $100 per share, a 50-100% premium over the shares average price during the last 30 day trading period.