Tsinghua Unigroup engineers Xueda Education re-listing in Shenzhen
Xueda Education Group, a Chinese tutoring services provider, has agreed to be privatized by Xiamen Insight Investment, a Shenzhen-listed shell company controlled by Tsinghua Unigroup, for approximately $368.8 million. Xueda will leave the New York Stock Exchange and re-list in Shenzhen via a backdoor listing.
According to a statement, Xiamen Insight is offering to $5.50 in cash per share for all outstanding 62.70 million American Depositary Shares (ADS), up from $3.38 when Insight made a non-binding offer to buy Xueda on April 20. The new offer represents a premium of 95% over the company's close price of $2.82 on the last trading day before the deal was first announced.
On April 21, Tsinghua Unigroup bought a 15.59% stake in Xiamen Insight, becoming the largest shareholder of the company. Tsinghua Unigroup is a unit of Tsinghua Holdings, an investment entity controlled by Beijing-based Tsinghua University.
In a separate filing, Xiamen Insight plans to raise RMB5.5 billion ($886 million) through a private placement to help finance the takeover and other projects. Xueda's management team, which currently owns 58.4% of the company, will participate in the share offering. Xueda expects to re-list on Shenzhen by the end of the year, pending regulatory approval.
Shenzhen-listed Xiamen Insight has been suspended from trading since February 6.
Xueda went public in the US in 2010, having previously raised funding from CDH Investments. Founded in 2004, the company provides tutoring services for primary and secondary school students in 85 Chinese cities. It reported $338 million in revenue last year, down from $347 million on 2013. There was a net loss of $10 million, compared to a $16 million profit the year before.
Tsinghua Unigroup's recent activities include investing $100 million for a minority stake in Acadine Technologies, a Hong Kong-based start-up developing mobile operating systems (OS) for mobile, wearable and internet-of-Things (IoT) devices. Two months ago, Tsinghua Holdings agreed to buy a majority stake in Hewlett-Packard's (HP) China-based data-networking business for approximately $2.3 billion.
Last year, Tsinghua Unigroup acquired Spreadtrum Communications, a Chinese mobile chip manufacturer backed by New Enterprise Associates, and also signed a strategic agreement with Intel Corporation, selling a 20% stake to the chip maker for $1.5 billion.
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