China's 51job agrees to lower buyout offer of US$4.3b

[HONG KONG] 51job agreed to accept a lowered takeover offer from a private equity consortium valuing the Chinese online recruitment company at US$4.3 billion.

An investor group backed by DCP Capital Partners and Ocean Link Partners reached a deal to buy the Nasdaq-traded firm for US$61 per American depositary share, according to a statement Tuesday (Mar 1), which confirmed an earlier Bloomberg News report. The transaction is set to be one of the largest take-private deals for a US-listed Chinese firm this year.

51job chief executive officer (CEO) Rick Yan and Recruit Holdings, the Japanese firm that ranks as the company's largest shareholder, are also part of the consortium.

The directors of 51job have approved the revised agreement, following a unanimous recommendation from a special board committee, and the deal is expected to close during the first half of the year.

The revised offer of US$61 represents about an 18 per cent premium to 51job's last closing price and an increase from the latest proposal of US$57.25 per share in cash.

51job's American depositary shares jumped 12 per cent in US pre-market trading Tuesday to hit as high as US$58.22.

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In January, the buyout group cut its original takeover bid by about 28 per cent to reflect tighter Chinese regulatory policies that are expected to hit the job market, as well as persistent economic challenges from Covid-19. The consortium plans to fund the takeover through a mixture of cash, equity contributions from existing shareholders as well as debt, 51job said in Tuesday's statement.

The group has access to as much as US$1.875 billion of committed term loan facilities arranged by China Merchants Bank and Shanghai Pudong Development Bank. 51job has extended the deadline for completing the deal to Aug 31 and also lowered the termination fee, according to the statement.

Recruit Holdings, the Japanese firm that ranks as 51job's largest shareholder, will hold a nearly 40 per cent stake in the company compared to about 37 per cent previously, according to a press release Wednesday.

The company expects to receive US$226 million in convertible bonds and US$304 million in cash, in exchange for part of its existing 51job shares, the release showed.

As part of the agreement, Yan, the 51job CEO, will own about 45 per cent of the company, people with knowledge of the matter said earlier.

The combined foreign ownership of DCP Capital and Ocean Link after the takeover will be capped at 9.99 per cent, the people said. The structure is aimed at ensuring the deal complies with new Chinese rules on data security.

Founded in 1998, 51job is one of the biggest providers of human resource services in China, with a call centre in Wuhan and a network of locations in more than 30 cities in the country, according to its website. It helps companies and job seekers with services ranging from initial recruitment to employee retention and career development.

Kroll's Duff & Phelps unit advised 51job's special board committee on the deal, while Recruit worked with JPMorgan Chase & Co. BLOOMBERG