E-Commerce Cosmetics Firm Jumei Terminates Plan to Privatize as Share Price Falls to Less Than Half of Quoted Price
Dou Shicong
DATE:  Nov 28 2017
/ SOURCE:  Yicai
E-Commerce Cosmetics Firm Jumei Terminates Plan to Privatize as Share Price Falls to Less Than Half of Quoted Price E-Commerce Cosmetics Firm Jumei Terminates Plan to Privatize as Share Price Falls to Less Than Half of Quoted Price

(Yicai Global) Nov. 28 -- Jumei International Holding Limited [NYSE:JMEI], a cosmetics e-commerce company, has canceled plans to privatize after its proposal 21 months ago, as its share price continues to fall, the company said in a press briefing yesterday.

The firm's share price has now fallen to less than half of the quoted price offered at that time.

The withdrawal of the privatization offer is a strategic choice based on the steady development of the company's e-commerce businesses and preliminary results achieved in efforts to diversify business and optimize management, the company said.

The firm's chief executive Leo Chen issued the USD7 per share privatization offer in February 2016 jointly with vice-chair Yusen Dai and shareholder Sequoia Capital. However, at that time, some investors criticized this move saying it could cause severe damage to the interests of small- and medium-investors since this price is far lower than the issue price of USD27 per share.

The company has been heavily undervalued in the US stock market, and privatization would enable the company to make more flexible and long-term decisions during its transformation period, said Chen in an internal letter.

Jumei's share price rose sharply by more than 30 percent yesterday on the news of the plan's cancellation, before falling 13 percent at closing at USD3.3 per share. It remains unclear if the company will move forward with privatization plans at a lower price set by management.

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Keywords:   Jumei,Privatization,Sequoia Capital,Leo Ou Chen