By Dhirendra Tripathi
Investing.com – Weibo (NASDAQ:WB) ADRs gave up almost two-third of the gains they had notched during Tuesday’s premarket trading but remained up 11% from Friday's close, after the company denied a news report that there are plans to take it private.
Earlier in the session, it had been up approximately 40%.
The initial move was triggered by a Reuters report that said its Chairman Charles Chao and a state investor are in talks to take the Chinese company private in a deal giving the Twitter-like firm a valuation of at least $20 billion.
Chao, whose holding company New Wave is the largest shareholder of Weibo, is teaming up with a Shanghai-based state firm to form a consortium for the deal, a Reuters report said.
According to the report, the consortium is intending to offer current shareholders about $90-$100 per share, a premium of 80%-100% to the share's $50 average price over the past month.
The share closed at $54.31 on Friday. U.S. markets were shut Monday on account of Independence Day.
The deal would have provided an exit to Alibaba (NYSE:BABA), another large shareholder in the company.
New Wave held a 45% stake in Weibo as of February valued at $5.6 billion as of Friday's close, followed by Alibaba with 30%, according to the company's 2020 annual report.
The development comes amid a crackdown by Chinese authorities on the large tech companies in that country over sharing of user data. With many of them listed in the U.S., there are concerns in the communist country over the large cache of consumer data these companies may have to disclose under the U.S. laws from time to time.