Sequoia backs competing take-private bid for Zhaopin
Chinese recruitment platform Zhaopin, which is already the target of a $1.1 billion take-private bid, has received a competing offer from a consortium including Sequoia Capital and company management.
According to a statement, the new proposal values the US-listed company at $17.75 per share, which represents a 1.4% increase on the prior offer made by CDH Investments and Shanghai Goliath Investment Management. The latest bid constitutes a 19% premium to the stock's May 11 close. Zhaopin shares spiked more than 8% after the announcement and were last trading at $16.05.
"We believe privatization of the company would allow the company to invest heavily for the future and compete effectively in the fast-changing China market without worrying about short-term gains," the Sequoia-backed consortium said in a separate disclosure.
Formed in 1994, Zhaopin was one of the early movers in China's online career-related services sector. The company claimed 104.8 million registered users as of the end of the September quarter last year, when it marked a 52% year-on-year increase in job postings for the three-month period at 8.4 million. It recorded a 35% increase in net profit during the 2015 financial year to $40.7 million. Total revenue during the year improved about 20% to $208 million.
Zhaopin's controlling shareholder, Australia-based Seek, built up a 79% stake in the business between 2006 and 2013, providing an exit for the likes of iD TechVentures, Legend Capital, Orchid Asia and Macquarie Capital. This stake fell to 62.8% last year, although Seek maintained 75.1% of the voting power.
The offer extends a raft of competitive take-private attempts for Chinese companies whereby PE-backed management groups vie for control against consortiums with no significant existing shareholding. Both Sinovac Biotech and iKang Healtch are currently in this situation.
More recently, the CEO of Autohome - which is majority-owned by Australia's Telstra - teamed up with a PE consortium that includes Sequoia to submit a privatization bid. This followed Telstra agreeing to sell its holding to Ping An Insurance Group.
Sequoia has participated in a number of other buyout attempts for US-listed Chinese groups, including Bona Film, Jumei and software provider Qihoo 360 Technology. Earlier this month, the firm supported a $3.5 billion take-private bid for NASDAQ-listed dating app operator Momo.
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