At first glance, Chinese insurance broker Fanhua Inc.’s (FANH.US) new announcement of the withdrawal of a bid to privatize the company looks like more of the same. Such on-again-off-again privatization announcements have become common among U.S.-listed China stocks over the last two years as the group came under an unprecedented series of assaults from both Beijing and Washington.
The typical cycle would see a company’s stock fall to fresh lows, prompting groups, often led by a company’s top managers, to launch privatization bids at a fraction of the company’s value before all the controversy began. But rather than rise in response to such offers, shares would often continue to fall as the U.S. and China continued to stoke fears about the future of these companies.
As a result, the management-led buyout groups would typically withdraw their offers, or just let them lapse. Sometimes they would submit new buyout offers at lower prices to reflect the big stock declines, though those were less common since the stocks would often just continue to fall.