Sina repels bid by activist fund to shake up board
Shareholders in Chinese internet group Sina voted to reelect the group’s existing board member on Friday, ending a months-long boardroom proxy battle with activist American hedge fund Aristeia Capital.
Eight-five per cent of shareholders present voted in favour of keeping incumbent board member Yichen Zhang, according to a Sina spokesperson.
The boardroom dispute represented a rare case of foreign shareholders attempting to influence corporate governance at a major Chinese company and could have opened the door to similar corporate reform disputes at other Chinese tech companies, many of which are listed in New York.
Aristeia Capital, Sina’s fourth-largest shareholder, had nominated two candidates to Sina’s five-person board in an attempt to address what it saw as “critical governance failures” that had resulted in a severe undervaluation of the Chinese internet company.
Aristeia has urged a series of proposals to close what it sees as a valuation gap, including having Sina to sell itself to a third-party buyer or attempt a reverse merger in which Weibo, Sina’s popular social media subsidiary, acquired the parent company.
Those proposals were presented to Charles Chao, Sina’s founder and CEO, who promptly “laughed them out of the room,” according to an Aristeia investor present at the meeting.
“We are not an activist hedge fund, but the lack of good corporate governance pushed us to nominate our own candidates to Sina’s board,” said the investor.
Meanwhile, Sina has contended that Aristeia’s proposals would detract value from the company and were not feasible within Chinese regulatory environment.
“Aristeia has played the financial engineering activist playbook without a whole lot of thought,” said a lawyer representing Sina.