Chairman Makes Takeover Bid for China’s Fang Property Portal at 210% Premium

The chairman of Beijing-based actual property portal Fang Holdings has made a suggestion to take the corporate personal at an almost 210 % premium to the inventory’s final buying and selling value earlier than the proposal was introduced.

Richard Dai submitted a preliminary non-binding provide to amass the American depositary shares he doesn’t already personal for $6.19 every, Fang stated Monday in a launch. The firm’s shares, which commerce on over-the-counter markets after being delisted from the NYSE final yr, closed at $2.00 on Friday and rose 150 % to $5.00 in resumed buying and selling on Tuesday.

“I intend to fund the proposed transaction with cash on hand,” Dai stated in a letter to the Fang board dated 4 September, including that the corporate’s enterprise would proceed to be run in a way “that is generally consistent with its current operations” after the proposed transaction.

The former president and CEO of Fang precursor Soufun Holdings, Dai succeeded firm founder Vincent Mo as chairman final yr after Mo stepped down for private causes. At the time, Fang was beneath strain from the NYSE for its failure to file audited monetary statements since 2019, in the end resulting in its ejection from the change.

Eclipsed by Rivals

Mo began Fang as Soufun.com in 1999 to offer a search engine for residential listings. He constructed the enterprise into China’s largest on-line actual property platform, but it surely was eclipsed by new rivals like Warburg Pincus- and Tencent-backed Beike, in addition to native classifieds platform 58.com and its property itemizing affiliate, Anjuke.

After a 2010 IPO, Fang’s enterprise mannequin of promoting banner adverts to cash-rich builders began to endure in 2014 when China’s property market entered a interval of slower progress and better danger. To counter this shift, Fang sank money into creating its personal community of company places of work, hoping to increase past promoting listings.

The firm additionally launched a value conflict with offline brokers by providing to facilitate offers at a 0.5 % fee price — the bottom within the trade — to draw homebuyers. The technique undermined Fang’s relationships with conventional intermediaries, who then boycotted the platform, additional driving down the corporate’s advert income.

In 2017, Fang publicly acknowledged the failure of its transformation and introduced a return to its conventional promoting technique, however income from its listings and advertising and marketing companies continued to shrink.

In early 2019, Mo stepped apart as Fang’s CEO in favour of the corporate’s president, Jian Liu, after income fell 25.5 % year-on-year within the third quarter of 2018. Mo had stepped again into the highest govt place at Fang in 2014 when Dai resigned to pursue research at Stanford University after main the corporate’s operations for eight years.

Shaky Ground

At the time of Fang’s final annual report for 2019, Mo nonetheless owned greater than 71 % of the corporate.

In 2020, a enterprise capital investor, Evenstar Master Fund SPC, sued Fang and Mo for what it alleged was self-dealing on the previous chairman’s half. According to the criticism, Mo arrange a charitable basis within the US that Fang paid cash into, however the funds as an alternative had been used to purchase mansions in New York’s Hudson Valley for Mo’s household.

In 2021, Fang subsidiary China Index Holdings was warned by the NASDAQ over failure to file an annual report for the earlier yr. Fang took the analytical unit personal final yr.