rtmark
LearnBonds.com

Alibaba Group Holding Ltd (NYSE:BABA) in Trouble With Hong Kong SFC

Alibaba group holding ltd

The Hong Kong’s Securities & Futures Commission (SFC) said that Alibaba Group Holding Ltd breached the takeover rules in its acquisition of CITIC 21CN Company Ltd. by entering another deal during the acquisition process. CITIC 21CN, in which the e-commerce company bought a stake in 2014, is now known as Alibaba Health Information Technology Limited.

Alibaba group holding ltd

How Alibaba Group Broke Takeover Rules?

The e-commerce firm agreed to pay $170 million to acquire a stake in CITIC 21CN in 2014. At the same time, the Chinese e-commerce giant signed an agreement with a shareholder of CITIC 21CN, namely Mr. Chen Wen Xin, to buy his solely-owned Hebei Huiyan Medical Technology Co. Ltd.

The Takeovers and Mergers Panel, which is part of the SFC, found that the signing of the deal, during the acquisition process of CITIC 21CN, was a breach of the takeovers code. Mr. Chen is the younger brother of Ms. Chen Xiao Ying, an executive director and vice chairman of CITIC 21CN.

The Panel ruled that the agreement between the e-commerce firm and Mr. Chen “constituted a special deal with favorable conditions which were not extended to all shareholders and was a clear breach of the Takeovers Code.”

The Takeovers Panel also found “that in consequence the whitewash waiver granted to Alibaba Group Holding Ltd was invalidated and therefore a mandatory general offer obligation has been triggered unless waived.”

Ms. Chen held an approximately 21% stake in CITIC 21CN before completion of the whitewash transaction.

“However, in light of the difficulties in placing a precise value on the favorable conditions received by Mr Chen, and the prevailing market price CITIC 21CN’s shares since the whitewash transaction was announced, the Takeovers Panel noted that any additional value to the subscription price Alibaba Group paid to acquire a majority interest in CITIC 21CN was most unlikely to be material in the context, and therefore waived the mandatory general offer obligation,” according to a statement.

Alibaba Group May Appeal The Takeovers Panel’s Decision

Alibaba Health, in which the company owns a 38% stake, is engaged in the development of product identification, authentication and tracking system for the healthcare and other industries. It is listed on the Stock Exchange of Hong Kong. Last year, Alibaba merged an online pharmacy business into healthcare firm. Once that transaction is approved, Alibaba will become an owner of a 53% stake in the healthcare firm, Reuters reported.

The e-commerce giant said it may appeal the panel’s decision. It told Reuters on Wednesday that it is reviewing the panel’s ruling and believes it has complied with the takeover code. Shareholders benefited by a 533% surge in Alibaba Health shares since its takeover, according to the company. “Therefore, we believe that no Alibaba Health shareholder has been unfairly affected,” it said.

Shares of Alibaba Group Holding Ltd were down 0.21% in the today trading session. The stock has lost nearly 3% of its value since the start of the year. The company’s gross merchandise volume (GMV) in China stood at $115 bn for the year ended March 31, 2016. This is a rise of 24% on a Y-o-y basis. This is a rise of 24% on a Y-o-y basis. A huge 73% of the same (which was 51% a year ago) was because of mobile. The firm saw a Y-o-y growth of 42% in its mobile monthly active users (MAU), taking the figure to 410 mn.

Chairman Jack Ma has overtaken Dalian Wanda Group Co.’s Wang Jianlin as Asia’s richest man. This comes after the company’s financial associate Ant Financial raised one of the biggest ever amounts for an Internet firm.

Trusted & Regulated Stock & CFD Brokers

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • 0% Commission
  • Trade Stocks Via CFDs
  • Authorized & regulated by the FCA

Min Deposit

$100

Charge per Trade

Zero Commission

Rating

Visit Now

80.5% of retail investor accounts lose money when trading CFDs with this provider.

Available Assets

  • Total Number of Stocks & Shares+2000
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Future
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • Dax Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire transfer
  • Credit Cards
  • Bank Account
  • Paypal
  • Skrill
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Avatar