The jailed billionaire founder of Gome is poised to take control of the Chinese electronics retailer in a $1.5bn deal that would pave the way for his return on his release, which, allies say, could be soon.
The deal marks the ultimate triumph in Huang Guangyu’s battles from prison to vanquish those who challenged him, including Bain Capital.
Under the terms of the transaction, Huang will sell Artway, another electronics retailer that he owns, to Gome in a cash-and-shares offer that will take his stake in Gome from 33 to 50.5 per cent.
Huang, who is known in Hong Kong and in public filings as Wong Kwong-yu, his Cantonese name, has conducted his business from prison since 2010, when he was handed a 14-year sentence for bribery and insider trading.
While most prisoners in China are in cells with a dozen or more other inmates, Huang has one to himself and has access to luxuries including a television, friends and acquaintances say.
Several of his lawyers and close allies in Gome’s management are directors on the Gome board and they, along with Huang’s wife, have managed the business according to his instructions since his imprisonment, the people said.
They also said that Huang was likely to be released soon. Gome declined to comment on this matter.
Gome shares fell 13 per cent yesterday to HK$1.27. The deal, which requires independent shareholder approval, consists of HK$2.2bn in cash, HK$8.6bn in new shares priced at HK$1.39 and warrants exercisable into 2.5bn new shares at HK$2.15.
Gome said the deal would simplify the company’s operations, expand its store network and integrate its supply chain and logistics.
Analysts questioned the value of the deal to Gome. “The listed company currently provides management and purchasing services [to Artway],” said Yaoxin Huang, analyst at CICC. “We do not expect many meaningful changes post-acquisition.”