FAST NEWS: Weimob cancels spinoff plan after shareholder feedback
The latest: E-commerce services provider Weimob Inc. (2013.HK) announced Sunday that it has decided not to proceed with a plan to transfer more than half of its stake in its digital marketing arm, Shanghai Weimob Culture Media, to another party as part of an eventual plan to potentially list the company on China’s domestic A-share market.
Looking up: The company said it will continue to consider repurchasing its shares in the open market. In addition, its Chairman and substantial shareholder Sun Taoyong plans to increase his own holdings of the company’s shares in the next six months.
Take Note: Weimob cited shareholder feedback for its decision to cancel the spinoff, which came just five days after it announced the original plan. That suggests it didn’t adequately consult with its major stakeholders before making the initial decision.
Digging Deeper: Founded in 2013, Weimob sells customer relationship management (CRM) software to e-commerce merchants mostly on WeChat, the social networking platform owned by Tencent. The company’s revenue grew quickly after it added digital marketing tools in 2016, but it began to stagnate around 2021. Last August, Weimob announced a reorganization into two main business units, and last week’s spinoff announcement represented plans to divest the domestic operations of one of those units, its marketing services subsidiary. But the spinoff plan got a chilly reception from investors, with the stock dropping 12% after the announcement.
Market Reaction: Shares of Weimob sank 6.9% on Monday after its withdrawal of the spinoff plan, but rebounded quickly on Tuesday to close up 6.9% at HK$1.87 by the midday break. The stock now trades near the lower end of its 52-week range.
Translation by A. Au
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