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China urges Diddy to delist from the U.S. due to Bloomberg’s security concerns

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© Bloomberg. Illuminated office window at Didi Global Inc. headquarters in Beijing, China, Monday, July 5, 2021. China has expanded its latest crackdown on the tech industry beyond Didi, including two other companies recently listed in New York. It hits investors around the world while strengthening government grip on sensitive online data.

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(Bloomberg)-Chinese regulators have asked Diddy Global, Inc. executives to devise plans to exclude them from the US stock exchange, people familiar with the matter said. ..

The country’s tech watchdog does not specify that it is discussing confidential matters, saying people want management to buy the company from the New York Stock Exchange because of concerns about confidential data leaks. I asked. China’s Cyberspace Administration, the country’s data security agency, has instructed Diddy to reveal the exact details, subject to government approval, they said.

People added that the proposals under consideration would include direct privatization in Hong Kong or a stock float followed by delisting from the United States. People say the proposal is likely to have an IPO price of at least $ 14, as lower offers can cause proceedings and shareholder resistance shortly after the initial public offering in June if privatization progresses. Said. If there is a secondary listing in Hong Kong, the IPO price is probably a discount on US stock prices, closing at $ 8.11 on Wednesday.

Shares of SoftBank Group, Diddy’s largest shareholder, fell more than 5% in Tokyo.

People said the deliberations were ongoing and regulators could turn back at their request. Both options will have a serious impact on the ride-hailing giant who has succeeded in the largest US IPO by a Chinese company. Alibaba (NYSE :) 2014 Group Holding Ltd. Didi’s representative did not respond to requests for comment.

Diddy aroused Beijing’s anger when it went public in New York this summer, despite regulatory requests to ensure data security prior to the IPO. Bloomberg News reported in July that Chinese regulators had swiftly launched multiple investigations into the company and considered an unprecedented set of penalties.

Delisting may be part of a package of penalties for Diddy. Beijing’s local government has proposed investing in a company that gives effective control to state-owned enterprises, Bloomberg News reported in September. Such investments could help Didi fund the repurchase of shares traded in the United States.

Didi is currently managed by co-founder Cheng Wei and president Jean Liu’s management team, with a total voting right of 58% after the company’s initial public offering in the United States. SoftBank and Uber Technologies (NYSE :) Inc. are Diddy’s largest minority shareholders.

Even if Diddy moves its listing to Hong Kong, regulatory-supervised data security concerns still need to be addressed. The company may have to give control of the data to a third party-again below that price tag.

According to Bloomberg News, regulators have been considering delisting Diddy since the summer after the world’s largest ride-hailing company promoted an IPO in the United States and infuriated officials. Withdrawal from the US stock exchange could raise the threat of a Chinese company outflow as Washington and Beijing vie for access to listed companies’ books. On Thursday, senior Chinese regulators said such delisting would be a recession in relations with the United States, but provided Hong Kong with broad support as an alternative location.

Didi, once blessed by defeating Uber in China, is now a test case for the broader Chinese government’s efforts to curb the power of Internet giants. The Xi Jinping administration is keen to promote his vision of sharing wealth or “common prosperity,” accumulating huge wealth by working around the law, and an unprecedented number of millionaires. We are targeting the Internet sector, which has enriched domestic and foreign investors. process.

State-led privatization is unprecedented for Diddy’s tall private companies, and the Chinese government has reduced the power of the country’s Internet companies and stored data and wealth during a decade of massive expansion. Make sure you continue to be devoted to unleashing. It will give a chilling signal to American investors who have long been accustomed to investing freely in China’s largest companies, from Alibaba to Baidu (NASDAQ :). And JD (NASDAQ :). com Inc.

Beijing’s move against Didi was particularly tough, even after crackdowns on giants like Alibaba and Tencent (OTC :) Ltd. The China Cyberspace Administration saw Diddy’s IPO decision as a challenge to central government authorities. As a result, CAC, Public Safety Canada, the Department of Homeland Security, and several other agencies began on-site inspections at Diddy’s office in July.

Since then, I’ve been involved in investigating data security and how to handle millions of drivers. Bloomberg News reported that many of the options Beijing is considering include reclaiming state control over companies that traditionally operate in legitimate gray zones.

(Updated with Softbank slide in 4th paragraph)

© 2021 Bloomberg LP

China urges Diddy to delist from the U.S. due to Bloomberg’s security concerns

Source link China urges Diddy to delist from the U.S. due to Bloomberg’s security concerns

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