Shares of 58.com Inc. (NYSE: WUBA) soared nearly 10% to $54.64 per American depositary share on the news of an investor group backed by Warburg Pincus and General Atlantic entering a deal to take it private, valuing the company at around $8.7 billion.
Under the deal, stockholders in China’s largest online marketplace for classifieds will receive $56 for each ADS, representing a premium of around 20% from its first buyout proposal it was offered in April.
The consortium also includes Ocean Link Partners and 58.com’s founder Jinbo Yao, which jointly controls 44% of the company’s voting power. The consortium group has also received up to $3.5 billion in loan commitments from Shanghai Pudong Development Bank Co. to help pay for the purchase.
Houlihan Lokey (China) Inc. is serving as 58.com’s financial advisor on the company’s special committee.
The deal makes 58.com the second Chinese listed Wall Street firm to announce a take-private deal in the past few days. The auto solutions provider Bitauto Holding Ltd. (NYSE: BITA) announced Friday it agreed to a $1.1 billion offer from an investor group led by the tech giant Tencent Holdings Ltd. (HKEX: 00700). In September 2014, Tencent reportedly increased its stake in 58.com to 24%.
In the full year 2019, 58.com’s revenues reached $2,232 million, up 19% year-over-year. Net income was $1,211 million, or $7.87 per share, compared with $304 million, or $1.87 per share in 2018.
According to the company, the merger is expected to close in the second half. Shares of 58.com are down 17% year-to-date.
58.com said the agreement, “is subject to customary closing conditions including the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders which will be convened to consider the approval of the Merger Agreement and the Merger.”