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51job Buyer Cuts Offer by 28% Amid China Tech Crackdown

(Bloomberg) -- The investor group buying 51job Inc. is cutting its takeover bid for the Chinese online recruitment firm by about 28%, as tighter regulatory policies continue to hit the country’s technology sector.

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The consortium backed by DCP Capital Partners has proposed to lower its offer to $57.25 per share in cash, down from an agreed bid of $79.05 per share, 51job said in a statement Wednesday. The new price represents a 25% premium to 51job’s last close in New York.

Bloomberg News reported earlier that 51job was considering reducing its $5.7 billion offer to reflect changes in the market environment. The buyer group, which also includes Ocean Link Partners and 51job Chief Executive Officer Rick Yan, said it’s restructuring the bid to reflect tighter Chinese regulatory policies that are expected to hit the job market, as well as persistent economic challenges from Covid-19.

The proposed changes will also help ensure the deal complies with new Chinese rules on data security, it said. The combined foreign ownership of DCP Capital and Ocean Link in 51job after the takeover will be capped at 9.99%, and the consortium believes the revised deal won’t trigger any regulatory filing in China, it said in the statement.

Since the takeover takeover was agreed in June, Chinese regulators have embarked on a sweeping crackdown on the internet industry. Beijing has been encouraging major tech firms to move their listings closer to home, and shares of Chinese online companies traded in New York have been hammered by increasing tensions between China and the U.S.

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51job’s special board committee hasn’t made any decisions on the revised proposal, which it plans to evaluate with advisers, according to the statement. Its American depositary receipts jumped as much as 11% in U.S. trading Wednesday, touching as high as $50.89, as the announcement assuaged investors’ earlier fears that regulatory difficulties could scupper the buyout. They were up 9.1% at 10:47 a.m. in New York.

Yan, the 51job CEO, will be taking a bigger stake in the company compared with the previous deal structure, people with knowledge of the matter said. Recruit Holdings Co., the Japanese firm that ranks as 51job’s largest shareholder, could also boost its holding from the earlier plan, according to the people, who asked not to be identified because the information is private.

A spokesperson for Recruit declined to comment, while representatives for the other consortium members didn’t immediately respond to requests for comment outside regular business hours.

DCP Capital is led by former KKR & Co. and Morgan Stanley private equity dealmakers. Ocean Link, which focuses on China’s consumer, travel and telecommunications, media and technology sectors, was part of an investor group that took 58.com Inc. private in a deal valuing China’s biggest online classifieds firm at about $8.7 billion.

(Updates with share movement in sixth paragraph, details of Recruit’s involvement in seventh paragraph.)

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