The luxury e-commerce platform Secoo (NASDAQ: SECO) will also be privatized.
On January 11, Secoo issued an announcement stating that the company’s board of directors has received a privatization offer from the company’s founder, chairman and CEO Li Rixue. Privatized Secoo at the price of US$6.54 per share.
It is understood that this price is about 25.6% premium to Secoo's closing price of $2.41 per share on January 8, 2021. Boosted by related news, Secoo’s stock price surged 22.82% to $2.96 on January 11, with a total market value of $209 million.
According to data, Secoo was established in July 2008 and listed on the Nasdaq in the United States on September 22, 2017. It issued 8.5 million American Depositary Shares (ADS) at $13 per share. Based on the issuance price of US$13, Secoo has raised a total of US$110 million in this US issuance.
However, on the first day of the IPO, Secoo fell below its issue price. Its opening price on September 22, 2017 was US$12.1. It fell to US$9.97 during the intraday session and closed at US$10.0, a 23.08% drop from its issue price. . Beduo Finance found that in August 2018, Secoo's share price created a record high of $15.48.
After that, Secoo fell endlessly, all the way down. On June 5, 2020, it fell to the lowest level in history of US$2.11, which was 83.77% lower than its issue price when it was listed. Even if it is privatized at a price of $3.27 per share, compared to the issue price, it has shrunk by about 75%, only a fraction of that.
According to Secoo’s announcement, its board of directors has established a special committee composed of independent directors Jun Wang and Jian Wang to evaluate and review the privatization proposal proposed by Li Rixue. Secoo stated that it has not yet made any decision on the company's response to the proposed transaction and cannot guarantee the conclusion of the relevant agreement.
Li Rixue
Secoo's recently announced financial report for the first three quarters of 2020 showed that its revenue during the reporting period was 3.685 billion yuan, a decrease of 23.7% from its revenue of 4.829 billion yuan in the same period in 2019; net profit was 20.8 million yuan, compared with the same period in 2019 Net profit was 62.1 million yuan, a 66.5% drop year-on-year.
As of September 30, 2020, Secoo’s GMV increased by 12.5% year-on-year to 4,120.4 million; the total number of orders increased by 7.1% year-on-year to 1,109 million, and it was 1,035,300 for the same period in 2019; the number of active customers increased by 7.5% year-on-year to 518.7 million , In the same period of 2019, it was 482.5 million.
According to Beduo Finance, in the first quarter, second quarter, and third quarter of 2020, Secoo’s revenue was 1.01 billion yuan, 1.31 billion yuan, and 1.37 billion yuan, compared with 1.18 billion yuan and 1.71 billion yuan in the same period in 2019. RMB 1.94 billion and RMB 2.04 billion were relatively sharp declines.
It is worth mentioning that Qudian (NYSE: QD), also listed in the United States, once offered an olive branch to Secoo. On June 3, 2020, Qudian and Secoo jointly announced that Qudian has agreed to subscribe for up to 10,204,082 newly issued Class A common shares of Secoo at a price of up to 100 million US dollars, equivalent to 9.80 US dollars per share.
After the transaction is completed, Qudian will hold approximately 28.9% of Secoo's shares and become its largest shareholder. According to the 2019 annual report released by Secoo, Li Rixue holds 21.7% of shares, Qu Plus Limited holds 16.9%, IDG Funds holds 16.4%, CMC holds 7.9%, and Ping An holds 6.3%.
On June 18 of the same year, the materials submitted by Qudian and Secoo showed that the delivery was completed on June 17, and Qudian held 35.49% of Secoo's equity through its Qu Plus Plus and Qufenqi. Among them, Qu Plus Plus spent about 15.2327 million US dollars, Qufenqi spent about 84.767 million US dollars, a total of 100 million US dollars.
Today, the share price of Secoo’s proposed privatization is only US$3.27 per share, which is about 75% depreciated from the issue price, and investors have suffered a considerable loss. Similarly, Qudian, which bought at US$9.8 per share and became a major shareholder, also suffered a loss of approximately 66.6% during the half-year period, or approximately US$67 million.
Previously, Chen Ou, founder and CEO of Jumei Youpin, had privatized Jumei Youpin (NYSE: JMEI) at a low price. In December 2020, Ruhan (NASDAQ: RUHN, also known as Ruhan Holdings) founders Feng Min, Sun Lei and Shen Chao also planned to privatize the company at a price of $3.4 per share.