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Didi jumps nearly 10% this week amid report of Chinese government taking it over

Written by News Sateek

Budrul Chukrut | LightRocket | Getty Images

Didi shares posted close to double-digit gains this week Bloomberg News report That Beijing is eyeing a plan to take the troubled ride-hailing giant under state control by acquiring stake through state-run firms.

Bloomberg News, citing people familiar with the matter, reported that state-owned Beijing Tourism Group and other companies based in the city would invest in Didi as part of an early-stage proposal. The group could also take a so-called golden share with veto power and a board seat to gain control over Didi, the report said.

Didi, which went public on the New York Stock Exchange in late June, climbed 2.4% on Friday, bringing its weekly gain to 9.7%. Still, the stock has lost nearly half of its value since the initial public offering amid regulatory pressure.

Didi did not immediately respond to CNBC’s request for comment. It’s not clear what the impact of state controls on the ADR structure will be, which trades on the NYSE rather than just common equity.

Didi is under cybersecurity review after China’s Cyberspace Administration accused the company of illegally collecting users’ data. The ride-hailing giant was forced to stop signing up new users and even removed its app from the Chinese app store.

Last week, The Wall Street Journal reported Didi was eyeing loss compensation schemes and investors compensation since its US IPO. Didi later denied the report.

Investors can buy into the recent fall after getting more clarity on Beijing’s measures. China’s cyberspace regulator earlier this week laid out two main conditions for companies wishing to go public, including complying with national laws and regulations and ensuring the security of national networks.

The stock gained 10% last week.

The Securities and Exchange Commission is also increasing its surveillance on Chinese companies seeking to list on US stock exchanges. The agency said it would require additional disclosures about the company’s structure and any risks from future action from the Chinese government.

– Click here to read bloomberg news Story.

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