As the tension between US and China escalated, some of the Chinese company have started to react by changing their financing strategy in US. It starts with SINA Corporation (SINA)’s $41 Buyout Proposal and then follow by Sogou Inc. (SOGO)’s $9 privatization. Both cases have the following common characteristics:

  1. Market Capitalization below US$ 5Billion.
  2. Offering party owns more than 50% of the total voting power of the company.

Base on this criteria, the following Chinese ADRs may be the candidates for privatization.

HUYA Inc. (HUYA)

HUYA Inc. (HUYA) is a leading game live streaming platform in China with a large and active game live streaming community. HUYA Inc started its initial public offering which priced at US$12 per share in 2018. Currently, the market capitalization of HUYA Inc. is around US$ 5.2 billion.

After the IPO, Huya’s parent company YY Inc was holding 54.9 percent voting power in the company, while a subsidiary of Tencent was holding 39.5 percent. However, on April 3 2020, the subsidiary of Tencent exercised its option to acquire 16,523,819 Class B ordinary shares for an aggregate purchase price of US$262.6 million in cash. As a result, Tencent held 50.9% voting power of the company.

Update: On 10 August 2020, Tencent Holdings Limited proposed that HUYA Inc. (HUYA) and DouYu International Holdings Limited (DOYU) enter into a stock-for-stock merger.

Cheetah Mobile Inc. (CMCM)

Cheetah Mobile Inc. (CMCM) is a leading mobile Internet company in China. In 2014, it started the initial public offering which raised about $168 million for US$14 per share. Currently, the market capitalization of Cheetah Mobile Inc. is around US$334 million.

Cheetah Mobile Inc is a wholly-owned subsidiary of Kingsoft Corporation, a Cayman Islands company publicly listed on the Hong Kong Stock Exchange (Stock Code: 3888). According to the 2019 annual report, the top three voting power entities are Mr. Sheng Fu (Chairman of Cheetah Mobile Inc, 47%), Kingsoft Corporation Limited (Principal Shareholders, 26.4%) and Tencent Holdings Limited (Principal Shareholders, 22.2%). As Kingsoft Corporation have delegated approximately 39.9% voting power to Mr. Sheng Fu in 2017, their voting right combine together will account for 73.4% of the total voting power.

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