GEO Investing

21Vianet Group Inc. (NMS:VNET) reported its Q2 financials and talked about recent corporate developments on Wednesday after market close.  About a month ago, Mr. Shang-Wen Hsiao had resigned as VNET’s CFO, which had been announced in late June of this year.  Terry Wang, an independent director, had been appointed as VNET’s current CFO.  Yesterday, it was announced Wang had stepped off the board of directors and that Sean Shao, a veteran in the US listed China based company space, had been appointed as VNET’s independent director and chairman of the audit committee.

On VNET’s earnings call, the company did not take any questions citing the pending go private transaction as an excuse.  The special committee has already retained Morgan Stanley Asia Limited as its financial advisor, K&L Gates LLP as its international and U.S. legal counsel and Conyers Dill & Pearman as its Cayman legal counsel in connection with its review and evaluation of its preliminary non-binding proposal dated June 10, 2015 for $23.00 per ADS. The proposal is from Mr. Josh Sheng Chen, the Chairman and Chief Executive Officer of the Company, Kingsoft Corporation Limited and Tsinghua Unigroup International Co., Ltd.

VNET CFO Replacement – Positive Sign For Go-Private Transaction

We believe that Mr. Shang-Wen Hsiao’s replacement with Mr. Terry Wang’s as CFO is a positive signal for this go private transaction.  We believe that it means that VNET does not need as professional of a CFO as Mr. Shang-Wen Hsiao to simply deal with investors after it has started the go private process.  We believe that retaining the veteran Shao as an independent director and as chairman of the audit committee will help smooth the go private process.  Therefore, we’re disregarding the revenue and guidance miss and we are still confident in VNET’s go private transaction. The only question that remains up in the air is when the deal will finally close.

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