What happened
The clock might be ticking fast on Chindata Group Holdings' (CD) tenure as a publicly traded entity. The China-based data center operator saw its share price zoom nearly 11% higher on Wednesday following the disclosure that it had received an offer to take it private.
So what
Chindata revealed in a regulatory document filed with the Securities and Exchange Commission (SEC) that it has received a non-binding buyout offer. Its main institutional shareholder, investment firm Bain Capital, has floated a deal under which it would take the tech company private. It has offered $8 per Nasdaq-listed American depositary share (ADS), plus $4 each for the company's foundational A and B shares, in a deal valued at $2.93 billion. That $8 per ADS price represents a 27% premium to the security's closing price Tuesday.
Bain Capital occupies pride of place among Chindata's institutional investors. According to the investment firm, it holds a more than 42% stake in the company.
The would-be acquirer's timing might not be ideal, however. Chindata's share price had generally been falling this year until the buzz and hype over artificial intelligence (AI) started to grow. (Theoretically, code-intensive AI applications will require more storage, necessitating greater take-up in data centers.)
Compounding that, Chindata's stock rose sharply in price after the company reported an estimates-trouncing first quarter at the end of May.
Now what
In boilerplate language, Chindata said in the SEC filing that its board has not yet determined a reaction to the Bain proposal. Additionally, said the company, "There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated."
Given the premium, though, it's a very compelling offer, so we shouldn't be surprised if Chindata's board gives it the thumbs-up.
