China's Le Gaga agrees Sequoia-backed take-private
Chinese greenhouse vegetable producer Le Gaga has agreed to be taken private by a consortium including Sequoia Capital, hedge fund Yiheng Capital and the NASDAQ-listed company's chairman and CEO. The deal values the company at around $185 million.
According to a filing, the group - which includes Na Lai Chiu and Shing Yung Ma, Le Gaga's chairman and CEO, respectively - will pay $4.06 per American Depositary Share (ADS). This represents a 21.56% premium over the closing price $3.34 on May 21, 2013 when the deal was proposed.
The price also represents an increase from the original offer of $4.01 per ADS put forward by Sequoia, Chui and Ma. Yiheng joined the consortium in March this year.
The consortium will fund the transaction through a combination of rollover equity from existing shareholders, a cash investment by Yiheng and a $30 million term loan from China Minsheng Banking Corp. The consortium members already own a majority of the company, with Ma, Chiu, Sequoia and Yiheng holding stakes of 32.49%, 5.62%, 15.76% and 6.25%, respectively, as of last October.
Sequoia led Le Gaga's Series A round in 2006, putting in about $4 million. It also participated in the Series B round two years later, which saw Susquehanna, Walden International and Pre-IPO Partners enter. The total commitment was $24 million. Le Gaga subsequently raised $103 million through its 2010 IPO.
The company started out in 2004 as a broccoli farming business run by Ma. It was incorporated in Hong Kong as Land V and then reincorporated in the British Virgin Islands before becoming Cayman Islands domiciled as Le Gaga Holdings for purposes of the IPO.
Le Gaga claims to be the leading greenhouse vegetable producer in China, selling pepers, tomatoes, cucumbers and eggplants, as well as green leafy vegetables, to wholesalers, institutional customers and supermarkets in China and Hong Kong. It operates 11 farms in Guangdong, Fujian and Hebei provinces.
The company recorded a profit of RMB98.2 million ($16.2 million) for the six months ended December 31, 2013, down 41.2% from RMB162.4 million a year ago. Revenue for the same period came to RMB179.4 million.
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