Fortune Tech Gains Despite Denying Speculation Sina Plans Backdoor Listing
Xu Wei
/SOURCE : yicai
Fortune Tech Gains Despite Denying Speculation Sina Plans Backdoor Listing

(Yicai Global) Dec. 5 -- Fortune Technology's shares jumped again today despite a denial from the healthcare products trader that Chinese tech giant Sina plans to use the Shenzhen-listed firm as the platform for a reverse merger.

Sina has no plans to inject assets into the Guangxi-based company nor conduct a backdoor listing on China's mainland market, Fortune Technology said in statement yesterday in response to recent speculation.

Still, Fortune Technology's shares [SHE:600556] gained almost 5 percent today to close at CNY4.23 (62 US cents) each. Yesterday, they surged by the daily trading limit of 10 percent.

Speculation about a possible reverse merger intensified after Ruilai Jiayu Investment Partnership, one of Fortune Technology's shareholders, decided to sell its holding to Tianxiaxiu Technology, a firm controlled by Sina and Fortune's actual controller Li Meng, for CNY570 million (USD83.1 million) on Nov. 30.

A reverse merger would enable Sina, which is listed on the Nasdaq Stock Market, to sidestep the potentially lengthier and more complicated process involved in going public in China.

Tianxiaxiu's purchase of Fortune Technology stock prompted the Shanghai Stock Exchange to send a letter requesting that Fortune disclose Sina's actual controller and shareholding structure, as well as the main content of any agreement between Sina and Li. It also asked for clarification on whether Tianxiaxiu Technology's operations and profits heavily depend on Sina's resources.

Fortune Technology has only conducted commercial negotiations regarding the underlying assets of Tianxiaxiu Technology based on an agreement between Li and Sina, its statement said. It has not had any contact with Sina and is not aware of the degree of Sina's participation in this transaction.

Li learned from Sina that it has no plans to inject its assets or conduct a backdoor listing beyond the transaction, Fortune Technology added.

Sina has a 34.5 percent stake in Tianxiaxiu Technology, while Li controls 16.7 percent. The pair signed a concerted action agreement last December. Tianxiaxiu will become Fortune Technology's controlling shareholder, while Sina and Li will hold stakes of 28.1 percent and 13.7 percent, respectively, according to a statement released on Dec. 2.

Tianxiaxiu will start to inject its own assets into Fortune Technology after obtaining control, the statement added.

Editor: William Clegg

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Keywords: Sina