Sina investor seeks changes in rare activism

HONG KONGSina Corp is being pushed by an investor to consider selling a prized asset or buy back stock in a rare instance of investor activism involving a major Chinese corporation.

Aristeia Capital said the Beijing-based company, which controls Chinese Twitter-like service Weibo Corp, trades at a 41% discount to its book value for a disparity of almost US$6 billion (RM25.14 billion). That’s in part due to mismanagement and the hedge fund wants two board seats to help address what it called years of “critical governance failures”. Aristeia said it’s nominating two director candidates after months of negotiations proved fruitless.

Sina shares have doubled this year, tracking a 160% gain for Weibo, as users of the microblogging site surged to 340 million and its market value overtook Twitter Inc. Much of the Chinese company’s success in the past couple of years has resulted from its willingness to chase users other social media services ignore, such as those in rural and regional provinces.

Aristeia made a number of proposals for boosting value, including a sale of Sina itself or selling its stake in Weibo. It also put forth the idea of a reverse merger in which Weibo buys Sina; and a stock buyback using an estimated US$18 cash per share available. In response, Sina said it will continue to hold discussions with the fund but said Aristeia, as a holder of just 3.5% of the stock, was pursing a “short-term and self-serving agenda” and an “‘uninformed strategy”. — Bloomberg