Didi shares surge after report that it's considering going private

Beijing

DIDI Global shares surged as much as 49 per cent in pre-market trading after The Wall Street Journal (WSJ) reported the firm is considering going private to placate Chinese regulators and compensate investors for losses.

The Beijing-based company has been in discussions with bankers, regulators and key investors about ways to resolve its regulatory woes since its troubled listing, the newspaper said, citing people with knowledge of the matter.

One of the options could involve a tender offer for the publicly traded shares, said the report.

Bloomberg News reported last week that Chinese regulators were considering serious, perhaps unprecedented, penalties for Didi, including forcing it to delist.

Beijing is likely to impose harsher sanctions on the ride-hailing company than on Alibaba Group Holding, which swallowed a record US$2.8 billion fine after a months-long antitrust investigation, and agreed to initiate measures to protect merchants and customers, people familiar with the matter have said.

Regulators are weighing a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor, they said.

Prior to Thursday, Didi shares have tumbled more than 36 per cent from their offering price, after Beijing announced a probe into the company and removed its services from Chinese app stores.

A take-private offer could be funded partly or mostly with money that Didi raised from investors in the initial public offering (IPO), WSJ said.

The price that the company would offer to investors has yet to be determined, but it could be around or above the US$14-per-share IPO price, said one of the people in the report.

The company had begun contemplating a go-private plan in mid-July. BLOOMBERG