Didi Shares Soar On Reports China State-Backed FAW Weighs Acquiring Stake
Didi Global Inc. shares jumped premarket after Bloomberg reports that Chinese state-owned automaker FAW Group Co. is talking with the troubled ride-hailing company to acquire a significant stake.
People familiar with the matter said FAW, one of China’s biggest automobile conglomerates, is in early talks with Didi’s top executives, pledging support to the company to fix data security issues that have angered Beijing, which, if corrected, would ultimately pave the way for a Hong King listing. Talks are early and may not pan out to anything, the people added.
Shares of Didi are up 8% premarket in New York after Bloomberg’s report.
Didi shares have crashed 87% from its IPO offering price of $14 through Thursday’s close and are down 63% YTD. In June of last year, Chinese cybersecurity regulators asked the company to sideline the IPO while regulators reviewed its data practice — that didn’t happen, and China unleashed a massive technology crackdown on the company over the past year.
In March, Didi suspended its Hong Kong listing preparations because it didn’t meet China’s requirements for handling sensitive user data. Then in April, Bloomberg said a senior Chinese government official told the country’s cybersecurity regulators that they still weren’t satisfied with Didi.
This week, shareholders of Didi approved a plan to delist from the New York Stock Exchange, concluding an 11-month regulatory mess.
Talks are still premature, and it remains to be seen if FAW will purchase a stake. If so, the country’s most important state-backed corporation could help the troubled ride-hailing company regain good status with Chinese regulators and pave the way toward a Hong Kong listing.
Fri, 05/27/2022 – 09:06