It looks likely – per this blog post from Deminor Recovery Services. With numerous US-listed People’s Republic of China (“PRC”) companies facing threats to their listings, the attractiveness of withdrawing from the US market may become stronger. Take privates, mergers, and other arrangements resulting in the delisting of the PRC company from the US exchange (with or without an intention to relist in the PRC or similar) can be expected.
The connection to appraisal? The vast majority of US-listed PRC companies are variable interest entities whereby the PRC-based operating entity contracts away its economic rights to a Cayman Islands based entity, which, in turn, lists American Depository Securities (ADS) or Receipts (ADR) on the US exchange. The delisting process goes in reverse – the delisting of the ADS/ADR and rolling up of the Cayman entity generally allows for Cayman appraisal rights.
Per the Deminor piece, experience suggests that many of these delisting arrangements will occur at prices unfavorable to shareholders, who may then turn to their Cayman appraisal remedy – something we have blogged about extensively before.
Will a wave of delistings result in a wave of Cayman appraisal? The pieces certainly seem to be in place.