Ocean and Ctrip Team Up to Challenge CEO-led Buyout of eHi

A war among eHi shareholders for the company's ownership continued as stock price fluctuates around $13 per ADS.
Anna VodApr 10,2018,00:00

The bidding war for Ehi Car Services Ltd. (NYSE: EHIC) continued as Ocean Link partnered up with Ctrip and reiterated its intent to buy the company at $14.50 per American depositary share.

Ocean Link L.P., a private equity group that invests in the travel and tourism sector in China, first proposed to purchase eHi’s shares on April 2. At the same time, the fund took ownership of 11.8 percent of eHi’s voting power through its affiliate Ocean Imagination L.P., which purchased CDH Car Rental Service Ltd. that held a stake at the company.

Ocean’s bid offered $1.15 more per share than what eHi's founder, chairman, and chief executive officer, Ray Ruiping Zhang, and investor group MBK Partners, among others, proposed in a partnership formed in January.

In response to competition from Ocean Link, Zhang and his partners raised their bid from $13.35 to $13.50 per share and formed Teamsport Parent Ltd., which holds nearly 38 percent of the voting power of eHi. On April 6, eHi announced it agreed to the buyout.

On the same day, Ocean Link formed a consortium with Ctrip.com International, Ltd. (Nasdaq: CTRP), which holds nearly 22 percent voting stake, according to a filing made today with the Securities and Exchange Commission, “to cooperate in connection with an acquisition transaction.”

Ctrip and Ocean Link have been working together in a strategic partnership since August 2016.

“Leveraging the insights and experience of Ocean Link's investment team and the support from Ctrip, we will aim to identify attractive investments in the rapidly expanding travel and tourism sector," said James Liang, co-founder, chairman, and CEO of Ctrip in a 2016 press release.

Separately, eHi, based in Shanghai, announced its full year 2017 results today.

Its earnings through December 31, 2017, were up nearly 30 percent to $421 million, compared with $303.8 million for the full year of 2016. The increase attributes to net revenues from car rentals, which were up 32 percent, and car services, up 22 percent.

EHi’s opening price today was $13.11 per share, a 14 cents decrease.


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