A management buyout proposal to take NASDAQ-listed Chinese online game developer KongZhong Corporation, backed by IDG-Accel China Growth Fund, has lowered its proposed price as expectations fell for the kind of valuations companies can get in a potential re-lising back in China.
An investor consortium including Wang Leilei, chairman and chief executive officer of the company, and IDG-Accel China Growth Fund II. L.P., said yesterday that they would buy the company’s all outstanding shares for US$7.18 in cash per American Depositary Share (ADS), compared to the US$8.56 price initially submitted last June.
Shares of KongZhong have increased to US$6.55 apiece at the end of day Thursday, up from Monday’s low of under US$6.20.
Chinese regulators have tightened control over back-door listings via reverse mergers, making it more difficult for U.S.-listed companies to achieve speedy re-listings in China after being privatized.
Earlier this month, a plan to take NASDAQ-listed Momo Inc., backed by Matrix Partners China, Sequoia Capital China, Alibaba Group Holding Ltd. and Yunfeng Capita, was scrapped.
Dozens of similar go-private proposals have taken a long time to reach completion, some lasting over a year. Many deals may be eventually canceled.
KongZhong develops Internet games and mobile games, with over ten smartphone games across various genres under development. The company was listed on the NASDAQ in 2004.