According to the Complaint, E-House (China) Holdings Limited describes itself as a “leading real estate services company in China.”
In June 2015, the Company announced that it had received a buyout offer from its CEO and another Director. Shortly thereafter, SINA Corporation joined them in forming a “Buyer Group.” On April 15, 2016, the E-House executed a merger agreement with the Buyer Group, where each ADS would be bought for $6.85 per ADS (the “Merger”). ADS holder approval, however, would still be required before the Merger could close.
The Company published a preliminary proxy seeking ADS holder approval for the Merger on April 25, 2016. The Complaint alleges that the preliminary proxy contained numerous false and misleading statements and omissions; specifically, that: (i) the Merger was fair and in the best interest of those investors not affiliated with the Buyer Group; (ii) there were no plans for post-Merger transactions; and (iii) the projections in the proxies were based on the best available information. The merger was approved based on Defendants’ false information on August 5, 2016, and closed on August 12, 2016.
According to their plans, yet contrary to their proxies, Defendants set into motion post-Merger transactions, which culminated in the registration of shares for listing on the Hong Kong Stock Exchange in July 2018. This relisting reflected a valuation far higher than the consideration of $6.85 per ADS given in connection to the Merger. The Complaint alleges that as a result of Defendants’ wrongful scheme to take E-House private at less than fair value (with the goal of relisting it at a higher valuation), former ADS holders outside the Buyer Group have suffered harm under the federal securities laws.