Jumei Stock Soars 25% on Going-private Deal

The merger is expected to close in the second quarter.

Anna Vodopyanova
    Feb 25, 2020 8:00 AM  PT
Jumei Stock Soars 25% on Going-private Deal
author: Anna Vodopyanova   

Shares in Jumei Int'l Holding Ltd. (NYSE: JMEI) skyrocketed 25% Tuesday morning on news that the company is going private.

The online retailer, based in Beijing, said in a statement today that it has accepted a merger deal to sell its outstanding American depositary shares at $20 apiece - that's an upside of 29% from Monday's close of $15.49.

In response to the announcement, the stock in Jumei soared to $19.37 per share in early trading on Tuesday.

Under the agreement, Jumei said it will carry out a merger with Super ROI Global Holding Ltd. and Jumei Investment Holding Ltd. Ultimately, Jumei will stay under the leadership of its founder, chairman, and chief executive, Leo Ou Chen. Chen currently holds 44.6% of Jumei's outstanding shares and 88.9% of the total voting power, according to company report.

Jumei first received the going-private proposal in mid-January, when its stock traded near $18 per share. Since then, shares in Jumei tumbled to a 52-week low of $15.32, weighed by the coronavirus scare.

The buyer group will fund the merger with debt financing, cash, and lines of credit, the company stated. The merger is expected to close in the second quarter of 2020.

Jumei debuted on Wall Street in May 2014 in an initial public offering of $245.1 million, with shares priced at $22 apiece. The company, focused on China's vast beauty product market, has been backed by Sequoia Capital, K2 Capital, and Success Origin.