Didi Global Inc. announced that it would hold an extraordinary general meeting (EGM) on May 23 to vote on its US delisting plans.
The Chinese ride-hailing giant also mentioned that it would pause floating its shares on any other stock exchange. It emphasized that it would prioritize first the delisting of its American Depositary Shares from the New York Stock Exchange.
Nevertheless, Didi added that it would continue to explore appropriate measures. This move will include a potential listing on another internationally recognized exchange.
Last December, the company stated that it would delist from the NYSE and pursue a listing in Hong Kong. This came after it ran foul of Chinese regulators by pushing its $4.40 billion US IPO last year.
Beijing authorities had urged the transport business to put its listing on hold. They explained that they still conduct a cybersecurity review of its data practices.
However, the company went ahead with its US listing. In the stated case, China’s cyberspace watchdog ordered app stores to remove 25 mobile applications operated by Didi.
The government agency commanded the company to stop registering new users, citing national security and the public interest.
The planned delisting will deal a heavy blow to the company’s valuation. This could even undermine investor confidence in Chinese stocks.
Experts explained that Didi’s move demonstrates the seriousness of the local government regarding data security. This is despite a considerable cost to the operations of business firms.
Correspondingly, the total revenue of the vehicle firm in the fourth quarter fell to $6.40 billion. It represented a 12.70% decline from the $7.33 billion a year earlier.
NYSE shares of Didi slumped 17.89% or 0.44 points to $2.02 per share on Monday’s pre-market trading.
CSRC says Didi’s decision won’t affect other firms
Moreover, China Securities Regulatory Commission said that the decision of Didi has nothing to do with other US-listed Chinese stocks.
CSRC further emphasized that the ride-hailing giant decided on its own based on the company’s situation.
This statement came after Didi said that it must cooperate further with China’s cybersecurity regulators in the investigation. The transport company also needed to conduct rectifications.
In addition, analysts mentioned that the firm will likely have considered the tighter regulatory climate.
Still, Beijing regulators have sent a strong message that companies should abide by rules when conducting their business activities.
Meanwhile, Tencent Holdings president Martin Lau Chi-ping has exited Didi’s board of directors. Liang Fengxia, associate general counsel of the gaming titan, will replace his position.