FAST NEWS: Chindata gets second buyout offer from China Merchants

The Latest: An investment arm of China Merchants Group said on Monday it made a non-binding offer to buy out data center operator Chindata Group Holdings Ltd. (CD.US) for $9.60 per American depositary share (ADS).

Looking Up: The offer price represents a 33% premium to Chindata’s close of $7.24 on Friday, the last trading day before the announcement.

Take Note: The bid will have to compete with an earlier bid of $8 per ADS made in June by Bain Capital, Chindata’s controlling shareholder with 42% of the company’s stock.

Digging Deeper: Chindata is one of three independent data center operators in China, and is more highly valued than the other two, VNET (VNET.US) and GDS (GDS.US; 9698.HK). Still, the company has a considerably lower price-to-earnings (P/E) ratio than global peers like Equinix (EQIX.US) and Digital Realty (DLR.US), possibly due to the political sensitivities of operating telecoms-related services in China. Both the Bain and China Merchants privatization offers are well below the company’s 2020 IPO price of $13.50 per ADS.

Market Reaction: Chindata ADSs rose 12.3% to $8.13 on Monday in New York. At its current level, the stock trades slightly above the Bain offer price, but is 15% below the China Merchants price.

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Reporting by Doug Young