Fashion e-commerce platform Jumei to go private · TechNode

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(Image credit: Jumei)

New York-listed fashion and lifestyle e-commerce platform Jumei said Monday that it had entered in agreement which would take the Chinese company private, ending its struggles to remain competitive in the cutthroat sector.

Why it matters: Once a popular online retailer for cosmetics and luxury products, Jumei’s downfall reflects the fierce competition in China’s fast-evolving e-commerce sector. It has tried and failed in two attempts to privatize which began in 2016.

  • The company owns power bank rental company Ankerbox, known as Jiedian, which holds 40% of China’s power bank market. The sector had 305 million users in 2019.
  • Jumei’s efforts to expand into other emerging tech trends such as livestreaming, offline stores, TV drama series production, and hardware has seen little success.

Details: In response to Monday’s announcement, the company’s shares soared 26% to $19.52 per share on Tuesday.

  • Under the agreement, Jumei said it will carry out a merger with Super ROI Global Holding Ltd. and Jumei Investment Holding Ltd., two entities that are held by the company’s founder and chairman Chen Ou.
  • If the takeover is completed, the company will stay remain under Chen, who currently holds 44.6% of Jumei’s outstanding shares and 88.9% of the total voting power, according to the statement.
  • The buyer group will fund the merger with debt financing, cash, and credit lines.
  • The merger is currently expected to close in the second quarter.
  • The company received on Jan. 12 a proposal from Chen to acquire all outstanding shares he does not already own for $20 per ADS in cash.

Context: Jumei raised $245 million in its 2014 IPO, with shares priced at $22 apiece.

  • Chen made his first proposal to privatize the company as early as Feb. 2016 at a buyback price of $7 per ADS. He scrapped the privatization offer in November 2017 after other shareholders protested the buyback.
  • Similar to many e-commerce peers, Jumei has been blighted by counterfeit product scandals.
  • In 2017, investors called the company out for acquiring power bank rental startup Ankerbox, an unrelated segment then seen as a risky endeavor.

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