Sequoia Capital China has made a take-private offer for NASDAQ-listed Le Gaga, according to a statement from Le Gaga.
The private equity firm, with the company chairman and chief executive, has proposed to buy all outstanding shares not already owned by a member of the consortium for $4.01 per American Depositary Share or $0.0802 per ordinary share. Currently, the consortium holds 50.84 percent of the business.
The deal values the company at around $183 million, with the price representing a premium of 16.57 percent over Le Gaga’s closing price on 20 May 2013 and a 20.67 percent premium over its volume-weighted average closing price during the preceding 30-day trading period.
The private equity-led consortium expressed the desire to use leverage financing for the deal and is “confident that we will secure adequate financing to consummate the transaction,” according to its proposal letter.
Le Gaga is a China-based greenhouse vegetable producer and distributes its produce to wholesale customers and supermarket chains in China, Hong Kong, as well as internationally.
Sequoia joins growing number of PE firms
The firm first listed on US stock exchange the NASDAQ in October 2010 and is likely one of many Chinese businesses whose shares have been undervalued on US stock exchanges due to numerous accounting scandals involving Chinese companies.
Private equity firms have seized the opportunity to do buyouts of these Chinese companies at discounted prices, a trend which appears to be increasing.
Just in May, The Blackstone Group led a consortium including company management in a $662 million offer to privatise China-based Pactera Technology, while weeks before, CITIC Capital Partners closed a $890 million buyout of NASDAQ-listed AsiaInfo-Linkage, using $330 million of debt of finance the transaction.
Other such deals include the $3.7 billion take-private of Focus Media in December by a private equity consortium including FountainVest Partners, The Carlyle Group and CITIC; and a $688 million take-private of hotel chain 7 Days Inn by Carlyle in March 2013. 7 Days was listed on the New York Stock Exchange and sold at a 30.6 percent premium over its share price on 25 September 2012.