The plunge in Chinese stocks and suspension of new share listings could hurt $32 billion worth of ''take-private'' deals in the U.S., M&A experts said. Fred Katayama reports.
Some Chinese companies listed in the U.S. dreamed of going back home to cash in, but they may now have to rethink their plans. Chinese stocks are nose-diving, and some M&A experts say that could hurt nearly $32 billion worth of deals. After rushing to the U.S. to list where it's easier to go public, more than two dozen Chinese companies had been hoping to delist, then buy out their outstanding shares in so-called "take-private" deals. They would then relist on the red-hot Chinese stock exchanges to capture much fatter valuations. After all, the Shanghai Composite Index had more than doubled in the 12 months ended May. But it has plunged roughly 30 percent since mid-June. And Beijing has practically shut the door on new IPOs in its bid to prop up the stock markets. The research head at JL Warren Capital, Junheng Li, said, "With the speculative exit being closed, most of the sponsors will have to cancel the buy-out offers." Those fears have slammed stocks of companies that were considering or planning to go private. After China's securities regulator announced the suspension of new share listings, stocks of online dating service Jianyuan.com dropped 16 percent on Monday, chat app maker Momo shed 8.4 percent, and medical research provider Wuxi Pharmatech fell 7.9 percent.