China technology company Sina Corp. is pulling out of a stock listing in the U.S. as regulators step up scrutiny of China companies. Sina said it was being taken private by chairperson and chief executive Charles Lao.
The deal values the company at $2.6 billion. The offer price is around $43.30 a share - a small premium over its last traded share price of $42.64 in New York. The price is higher than a July buyout offer from New Wave Holdings Corp. - which is also owned by Chao.
Sina, which owns China's version of Twitter called Weibo, was listed on the Nasdaq composite index in 2000.
A prolonged trade dispute, which trickled into the technology sector, is now beginning to affect the finance sector. U.S. regulators previously imposed new policies that intensified the auditing of existing U.S.-listed China companies and those with plans to list.
In May, the U.S. Senate passed a bill that bans foreign companies refusing to submit to comprehensive auditing ahead of listing. One of the bill's sponsors said the goals were to "kick deceitful Chinese companies" off the country's capital markets.
Later, a working group on financial markets released a report recommending that U.S. exchanges increase their scrutiny of listed China companies and their requirements for foreign entities.
This caused concerns among currently listed China companies and resulted in a wave of secondary listings in Hong Kong and mainland China. Two of the first U.S.-listed companies to launch a second listing closer to home were Alibaba Group and JD.com. They were followed by others.
"Chinese companies currently listed in the U.S. will continue a stampede to issue secondary shares in Hong Kong and domestic markets and these markets will also be the main destinations for new listings by Chinese companies," analysts from Eurasia said.
