Dalian Wanda Groups’ Wanda Sports (Nasdaq: WSG) has received a buyout offer from its controlling company.
Under the deal, Wanda Sports & Media (Hong Kong) Holding Co. Ltd., (WSM) has offered to buy all shares of the company for $2.50 each, according to a statement by WSG today. The offer represents a premium of roughly 39% from WSG’s close on Tuesday.
WSM, which owns 72% and has 91% of voting power in WSG, intends on funding the deal via equity investments or loans.
“We believe that our Proposal provides a very attractive opportunity for the holders (directly or via ADSs) of the Class A Ordinary Shares, especially during a time of ongoing COVID-19 uncertainty,” WSM said in its buyout proposal.
In early trading Wednesday, shares of WSG surged nearly 22% from Tuesday’s close to $2.19 per American depositary share. Even with today’s big gain, the stock remains down year-to-date.
Also, assuming it accepts the deal, it would end a short trading run—which has been a disappointing one for shareholders. In July 2019, WSG raised $190 million in its IPO through the sale of 23.8 million shares priced at $8 apiece. The stock is now down nearly 73% from its IPO issuance price.
(Yahoo Finance!: WSG)
Meanwhile, WSG might be showing quicker than anticipated improvement in the recovering sports industry. Although WSG posted revenue of $58.19, down 82% year-over-year on earnings that declined 74% to 5 cents—the results were still handily ahead of analysts’ estimates.
The news today would make WSG the latest Chinese U.S-listed firm to either weigh or accept a buyout offer—joining a slew of companies this year. This week alone, Chinese gaming giant Tencent Holdings Ltd. (HKEX: 0700) struck a deal to buy out search engine platform Sogou (NYSE: SOGO), followed by Sina Corp. (Nasdaq: SINA) announcing it would go private.
The company has yet to “carefully” look over the proposal from WSM and said there is no assurance that a transaction will be “approved or consummated.”