US investors oppose rush by Chinese companies to delist

So far this year, around two dozen US-listed Chinese companies have received offers for delisting and are planning to go hom to float on the domestic A-share market as they believe Wall Street investors have seriously underestimated their value and planned to buy back shares from US investors.

Immono.com, which listed in the US market just six months ago, on June 23 unveiled its delisting plan, prompting US law firm L&K to launch an investigation into the legality of the move. L&K is collecting views from shareholders with a view to bringing a suit.

On June 23, the US Securities and Exchange Commission (SEC) filed a suit against Luo Haijian, CEO of Chinese online game firm 4399 Co, who was believed to have made more than US$1 million trading options in Qihoo ahead of the news last week that the tech firm had received a buyout offer at a 16.6% premium over its June 16 closing price.

China Cord Blood Corp’s delisting plan also triggered complaints, with US investor Jayhawk Capital, which owns a 9.1% stake, suggesting in April that its independent board directors reject the delisting plan proposed by the chairman. The investor believes the delisting offer price of US$6.40 per share is at least 62% lower than its projected fair value.

After seeing the crazy gains of China’s A-shares since early this year, many US-listed Chinese companies have unveiled plans to delist, triggering investigations and lawsuits from the US stock regulator and law firms after complaints from the US government and general investors, our sister paper Commercial Times reports.