China's Orient Hontai fails to secure AppLovin buyout, switches to debt deal
US-based mobile marketing platform AppLovin has terminated a planned $1.4 billion acquisition by Orient Hontai Capital, a PE unit of China’s Orient Securities, after a long delay in the regulatory approval process. It has opted for a debt-based deal instead.
Orient Hontai agreed to buy a controlling stake in AppLovin in September of last year, with the transaction expected to close within a few months of the announcement. However, the Committee on Foreign Investment in the United States (CFIUS) raised concerns about the security of the company’s data under a foreign owner, according to a Reuters report posted on AppLovin’s website.
Instead of taking a larger stake in AppLovin, Orient Hontai has made $841 million debt investment in the company. AppLovin also disclosed that it sold a 9.98% stake to the Chinese investor for $140 million in January.
“This debt financing allows us to maintain full control of our business while accessing additional capital to help finance our continued global growth,” Adam Foroughi, co-founder and CEO of AppLovin, said in a blog post.
Founded in 2011, AppLovin provides automated marketing services that allow brands to acquire new consumers on mobile and Apple TV apps. The company claims to have been consistently profitable since its first year of operation and generated about $500 million in advertising income last year. Headquartered in Palo Alto, AppLovin also has offices in San Francisco, New York, Dublin, Beijing, Tokyo, Seoul, and Berlin.
Orient Hontai Capital is a subsidiary of Orient Securities Capital Investment, which is wholly-owned by Shanghai-listed Orient Securities. It focuses on healthcare and media technology, with previous investments including gaming companies Shanda Games, China Mobile Games & Entertainment and FunPlus.
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