Analyst Summary
- Cango Inc. received a preliminary non-binding letter of intent from Enduring Wealth Capital Limited (EWCL) to obtain control of the Company.
- EWCL proposes to acquire 10,000,000 Class B ordinary shares from Cango’s co-founders, Mr. Xiaojun Zhang and Mr. Jiayuan Lin.
- The proposal includes corporate actions to maintain 20 votes per share for the acquired shares, the Founders’ resignation, and restructuring of the Board and management as requested by EWCL.
- EWCL suggests disposing of Cango’s existing business in the PRC and introducing a potential buyer to facilitate growth outside China, particularly in the crypto mining business.
- EWCL proposes making a filing with the China Securities Regulatory Commission (“CSRC”) for the termination of the Company’s status as a “China Concept Stock” subject to CSRC’s jurisdiction.
- A special committee of independent directors has been formed to assess the Letter of Intent and the Proposed Transactions.
- The special committee is expected to retain independent legal and financial advisors.
- Cango cautions shareholders that the Board has not yet carefully reviewed or evaluated the proposals or performed sufficient due diligence on EWCL.
Potential Implications
Stock Price
- The announcement of a potential acquisition could lead to increased stock price volatility.
- Uncertainty surrounding the deal’s completion may create fluctuations in the stock price.