Through a complex ownership structure, the Chinese management groups tend to control the vote on these deals. And legal challenges are complicated too, given that most of the companies are incorporated in the Cayman Islands, where local law is seen offering little protection to minority shareholders.
That didn’t stop Liang from unleashing a torrent of lawsuit threats against Jumei’s leadership in a widely publicized statement in late February. He said he’s working with other minority shareholders to compile their complaints. In the feud with Dangdang, he’s hatched a more developed plan, having put together a competing acquisition bid that, at a valuation of $468 million, is 13 percent higher than management’s offer.
Press officials at Dangdang didn’t respond to e-mails and phone calls seeking comment on the transaction. Jumei officials declined to comment.
The Jumei buyout group had called its offer “attractive” back in February, months after founder Leo Ou Chen complained that the company was being “seriously undervalued” by U.S. investors. And in a statement accompanying their bid last year, the chairwoman and the CEO of Dangdang said the proposal provided “superior value” to shareholders and noted how it was higher than the previous day’s close, an argument that’s been echoed by pundits unsympathetic to Liang’s cause.
Many of his critics have openly doubted he can come up with the money needed to fund his counter-offer for Dangdang, a perception he’s tried to squelch by teaming up with industrial conglomerate Jiangsu Huaxi Group Co. on the deal. “IMeigu is just a noisemaker,” said Jun Zhang, head of China research at Rosenblatt Securities Inc. in San Francisco. “It won’t have much substantial impact. They are probably doing this for the fame.”
To many fellow minority shareholders, though, Liang is something of a hero.
“It’s a bold move,” said Peter Halesworth, the founder of Heng Ren Investments, a Boston-based firm that invests in Chinese companies listed overseas. “We appreciate it and other investors should appreciate it. We need investors to raise their voices and push back against low-ball offers.”
Rice and Bananas
Liang was born and raised far from the financial centers in China’s north.
The son of rice and banana farmers from a small village in the heart of the country’s southern industrial base, he became the first member of his family to attend college when he made the 1,000-mile journey to the Chengdu University of Technology. He’d go on to try his hand at a couple different jobs before breaking into journalism and deciding with a colleague to launch their own financial news website. They named it Xueqiu -- Chinese for snowball, a nod to the book that chronicled the life of their hero Warren Buffett -- and scored financial backing from Sequoia Capital. That success in turn led Liang and one of his Xueqiu colleagues to try investing itself in 2013, when they founded iMeigu in Beijing.