AutoNavi Holdings Ltd. (AMAP:US) surged the most on record in New York after Alibaba Group Holding Ltd. offered to buy the shares of the Chinese online map content provider it doesn’t already own.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. was little changed at 97.29 yesterday as 33 stocks rose and 20 declined. AutoNavi jumped 24 percent while social media operator Renren Inc. (RENN:US) gained 5.6 percent. Changyou.com Ltd. (CYOU:US), the online gaming unit of Sohu.com Inc. (SOHU:US), tumbled to the lowest since 2012 after saying its Chief Financial Officer resigned and forecasting a drop in revenue.
Alibaba, China’s biggest e-commerce company, offered $21 for each AutoNavi American depositary receipt, implying a 27 percent premium to the closing price on Feb. 7. The deal values AutoNavi, which competes in online mapping service with Baidu Inc. (BIDU:US), at about $1.6 billion. Alibaba, formed by billionaire Jack Ma in 1999, owns 28.3 percent of AutoNavi’s shares and intends to pay for the potential purchase with cash on hand.
“Over the past year, AutoNavi has begun to feel it was difficult to grow without Alibaba to compete with Baidu’s mapping service,” Henry Guo, a senior analyst at ABR Investment Strategy LLC, said yesterday by phone from San Francisco. “Alibaba is the least ready on mobile products compared with other big Internet companies. AutoNavi’s map service will become an entry for mobile traffic.”
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., slipped 0.9 percent to $34.10. The Standard & Poor’s 500 Index added 0.2 percent before Federal Reserve Chairman Janet Yellen delivers her first report on monetary policy today.
AutoNavi’s ADRs surged to $20.57, rising the most since its U.S. listing in July 2010. Trading volume was 37 times the 90-day average compiled by Bloomberg. The company, based in Beijing, provides Chinese digital map content to companies from Apple Inc. to Sina Corp.
The offer has been submitted to AutoNavi’s board and is subject to reaching a definitive agreement, Alibaba said. The valuation was calculated on the assumption that AutoNavi has about 300.4 million ordinary shares, based on Alibaba’s statement. Hangzhou-based Alibaba invested $294 million in May for a stake in AutoNavi.
Alibaba is bolstering its e-commerce reach with applications for smartphones and tablet computers to help compete with Tencent Holdings Ltd. and Baidu Inc. The company has been valued at an average of about $150 billion as it considers moving toward the biggest initial public offering since Facebook Inc.
Renren, owner of a real-name social networking website based in Beijing, jumped to $3.40, the largest advance in three months. A unit of Baidu, the biggest web search engine in China, agreed last month to acquire a remaining stake in the group-buy website Nuomi.com held by Renren.
Changyou.com tumbled 11 percent to $26.74 in New York. Changyou said yesterday its CFO Alex Ho resigned, leaving the company to start his own business. It forecast first-quarter revenue will drop from the previous three months to as low as $174 million.
Timothy Chan, an analyst at Morgan Stanley, cut the rating on Changyou to a sell equivalent in a note yesterday. He also lowered his share-price estimate to $26 from $40.
Sohu, which owns online services including games, video and search, was little changed at $71.55 after dropping as much as 8.9 percent earlier. The Beijing-based company posted a surprise quarterly profit amid surging revenue from brand advertising, according to its statement yesterday. It also forecast first-quarter revenue to reach $355 million to $367 million. That missed the $378.3 million average of four analysts’ estimates compiled by Bloomberg.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong fell 0.3 percent to 9,613.77, after declining 1.8 percent last week. The Shanghai Composite Index advanced 2 percent to 2,086.07, the highest level in five weeks.
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