Dangdang's verbal vomiting ceases
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Verbal abuse heaped on Morgan Stanley over its alleged undervaluing of a Chinese e-commerce firm Dangdang. com's recent American share issuance was apparently unwarranted, pundits said Tuesday.
Underwriters like the US investment bank do not determine stock issuance prices by themselves, and instead prefer to make the final decision as part of a collaborative effort between the two sides, Song Guoliang, a finance professor in the University of International Business and Economics, told the Global Times Tuesday.
But the share issuer may be pressured to proceed with "not-so-ideal pricing" because any delay or restart of the IPO process can incur huge costs, he said.
Li Guoqing, co-founder and CEO of Dangdang.com, a New York-listed Chinese counterpart to Amazon.com, stopped his public tirade against Morgan Stanley over the alleged undervaluing of his company's stocks after the issue drew international media spotlight in recent days.
On Saturday night, Li claimed in a posting on his microblog that Morgan Stanley had promised to help the company raise between $1 billion to $6 billion from an initial public offering (IPO) in the US, but the bank eventually priced it only at $1.1 billion citing rising tensions between the Koreas at that time.
In the rap lyrics-styled post, which used a variety of curse words, Li accused the investment bank of "acting (deceitfully)" and said he would revenge after the "quiet period," which ended Sunday.
Over 6,600 microblog users re-posted the statement and nearly 2,900 users commented.
Among the commentators were two self-proclaimed Morgan Stanley employees, who fought back with personal attacks and a barrage of profanity, while Li was not yielding, accusing the Chinese of working as slaves for foreigners, a reference to the 19th century colonialism by the industrial-ized countries in China.
The exchange of angry tweets went on for two days and has attracted the attention of major news media including the Wall Street Journal and the Financial Times.
Both companies tried to tone down the public dispute Tuesday. Dangdang issued a statement on its official blog website, saying the lyrics were "fictional" but it was wrong for Li to use obscene language. Morgan Stanley said it had investigated the matter and said its employees had nothing to do with the online postings.
Zhang Ying, a spokesperson at Dangdang, declined an interview request from the Global Times, while Morgan Stanley's Beijing office did not reply to a similar request.
It is not uncommon for competing banks to offer rosy estimates of potential share sale value in a bid to win the right to act as an underwriter for a client float, said Patrick Chovanec, an associate professor at Tsinghua University's School of Economics and Management in Beijing.
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