Sequoia, Fosun support take-private for China’s Bona Film Group

Sequoia, Fosun and Dong Yu, Bona's founder, chairman and CEO, are willing to pay $13.70 per share in cash for all outstanding American Depository Shares (ADS), according to a regulatory filing. This represents a 6.5% premium to the June 11 closing price. The stock closed up 1% at $12.99 on June 12, having gained 76% in the last three months.

This the sixth privatization bid for a US-listed Chinese company announced in the past fortnight. The primary driving factor is the strong performance of China's domestic markets and the perceived valuation arbitrage that can be achieved by re-listing businesses on home bourses.

As of April, Yu held a 30.13% stake in Bona, while Fosun and Sequoia owned 19.27% and 5.24%, respectively. Other investors include SIG Asia Investment and SAIF Partners with 6.33% and 7.49%.

Sequoia first backed Bona in 2007 and was one of three VC investors - alongside Matrix Partners and SIG - disclosed in the prospectus when the company went public in late 2010, raising approximately $100 million. Fosun bought a 6.4% stake in the company from Matrix Partners China and other undisclosed pre-IPO shareholders in 2013 for $20.8 million.

Last year, the Chinese conglomerate agreed to purchase another 13.3% for $49 million. It acquired the interest from Yu, who wanted to fund his acquisition of 21st Century Fox's entire 19.3% holding in Bona. An affiliate of Fox invested in the company in 2012 and they had five co-productions in the works at the time of Fox's exit, including a Chinese-language remake of "Bride Wars."

Bona is involved in the production and distribution. The company distributes approximately 15 films each year. It distributed or invested in 202 features between 2003 and 2014, operating through a network that covers Greater China, South Korea, Southeast Asia, the US and Europe. There is a co-production agreement with Universal Studios and Working Title Films in addition to Fox.

Bona owned and operated 25 movie theaters in 15 Chinese cities as of December 2014 and it also has a talent agency business. Revenue came to $254.1 million in 2014, up from $149.3 million the previous year, while net income rose from $4.5 million to $5.8 million over the same period.

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• Topics
• Buyouts
• Greater China
• Media
• buyout
• China
• Media
• Fosun Group
• Sequoia Capital