Shares of Dada Nexus (DADA 0.73%) were soaring today on news that JD.com (JD 0.76%) had proposed acquiring all of its outstanding shares for $2 per American Depositary Share.
As a result, the stock was up 33% as of 10:38 a.m. ET.
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JD seeks to consolidate Dada Nexus
JD.com, the Chinese e-commerce giant and China's largest direct online seller, offered to buy out its on-demand delivery partner at a 42% premium today.
Dada Nexus said it had formed a special committee composed of three independent and disinterested directors to evaluate and consider the proposal.
JD.com has not released a statement on the offer yet, but presumably, the company is proposing an acquisition because it thinks Dada Nexus is a good value at the price. Both stocks have struggled in recent years due to the weak economy in China, but a full acquisition of Dada Nexus could give JD.com ownership of its delivery partner at a good value.
What's next for Dada Nexus
Considering that JD.com is already the majority owner of Dada Nexus and the offer pays a substantial premium, a deal seems more likely than not. Investors seem to be leaning toward acceptance as the stock was trading at $1.88, slightly below the offer price but up substantially from Friday's closing price.
Dada Nexus's revenue is down 7% through the first three quarters of the year, and its operating loss has expanded significantly as well. With headwinds remaining in China and no signs of recovery in the business, a buyout seems to be the best move for shareholders.
