The deal terms value Bona, China’s leading independent distribution firm, at $1 billion.
Special purpose company, Mountain Tiger International will offer US$13.7 for each of the company’s American Depositary Shares. Among the backers of Mountain Tiger are Alibaba Pictures Group, Tencent subsidiary Willow Investment and two other new investors Uranus Connection and All Gain Ventures. Alibaba Pictures said that it will invest some US$86 million in the deal.
Yu Dong, the company’s founder and chairman, along with Fosun International, Sequoia Capital and SAIF will all roll over their holdings and continue to own 62% of the company.
The deal is currently expected to close during the second quarter of 2016. It has already received unanimous board approval, but still requires two thirds approval from shareholders.
The offer price represents a premium of 6.5% over the Bona’s closing price of US$12.86 per ADS on June 11, 2015, the last trading day before the company announced a “going-private” proposal.
The ‘buyer group’ will fund the deal through a combination of rollover financing worth US$634 million and equity financing provided by the investors and Yu worth US$366 million.
After completion, the share will become private and delist from NASDAQ.
The company has not said what its plans will be thereafter. Numerous other Chinese companies have delisted from the U.S. markets in order to relist on equity markets nearer to home, where valuations for a while were significantly higher.
While the IPO market in China is currently stalled, the company is likely to seek to refloat as soon as possible. Its $1 billion valuation on exit from NASDAQ is puny compared with the prices attached to entertainment concerns in China which, unlike Bona, have yet to turn a profit.