Despite the current post-trial silence, the high-profile valuation dispute over 51job's privatization—a case that once stirred the Chinese ADR market—appears to be approaching its conclusion.
The Grand Court of the Cayman Islands completed hearings on the "51job valuation dispute" between June 24 and July 29 this year, as scheduled, but has yet to disclose any supplementary rulings or revised judgments.
Notably, the trial process was not without turbulence. In May, 51job sought a postponement, citing "increased case complexity and the need for additional time to prepare evidence and arguments." The company proposed delaying the trial until late 2025 or 2026 or extending hearings by six days. However, Justice David Doyle rejected the request, stating that the trial schedule had been confirmed by both parties in June 2024 with no material changes and emphasizing the need to protect dissenting shareholders' right to a fair hearing.
At the heart of the dispute is a challenge by dissenting shareholders under Section 238 of the Cayman Islands Companies Act, demanding a judicial reassessment of the fair value of 51job's shares during privatization. The two sides' expert valuations diverged by a staggering $1.7 billion, with disagreements centering on "per-share valuation" and "methodology validity."
Dissenting shareholders argue that the 2022 privatization price of $61 per share severely undervalued the company. Their key evidence is a discounted cash flow (DCF) model calculation, which pegged fair value at $111.06 per share—far exceeding the $61 transaction price.
The DCF valuation referenced critical metrics from 51job's core recruitment business: 2021 revenue of RMB 4.42 billion, over 200 million registered users, and a 40%+ market share in finance and internet industry hiring. Dissenters also highlighted that the final $61 price represented a nearly 23% drop from the buyer consortium's initial $79.05 per share offer in September 2020, failing to reflect asset value adequately.
However, Justice Doyle had already dismissed these arguments in December 2022. The court upheld the company's use of "market price retrospective analysis" and "industry comparable multiples," concluding the fair value was just $31.11 per share—significantly below even the $61 final offer.
Justice Doyle explicitly rejected the DCF model's validity, noting its reliance on financial projections (e.g., 2022 forecasted revenue of RMB 4.454 billion) disconnected from actual market conditions during privatization in May 2022, when the recruitment sector faced regulatory tightening and demand volatility.
With Justice Doyle poised to issue a second ruling, the protracted dispute may finally be resolved.
The privatization timeline reveals how price adjustments fueled the conflict: - September 2020: A buyer consortium led by DCP Capital and Ocean Link proposed a $79.05/share offer, valuing 51job at ~$5.7 billion. - June 2021: 51job signed a definitive agreement at this price. - January 12, 2022: Citing "deteriorating market conditions and regulatory pressures," the consortium cut the offer to $57.25/share, sparking shareholder backlash. After negotiations, the final $61/share price (valuing the company at $4.3 billion) was set on March 1, 2022—still a 33.1% premium to the $45.83 closing price on January 11 (the last trading day before the price cut). - May 6, 2022: The deal closed, delisting 51job from Nasdaq, after which dissenting shareholders filed the valuation lawsuit.
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