Cango Stock Rises ~15% On Buyout Interest

The car trader that recently shifted to bitcoin mining said a group wants to buy a controlling stake from Cango's co-founders

Cango Inc. (CANG.US) said on Friday it has been approached by an investor interested in taking control of the company, representing the first such bid since its pivot late last year from car trading services to bitcoin mining. Such offers typically carry big premiums to a company's current value, which for Cango currently stands at about $400 million.

Cango said it received the non-binding letter of intent to obtain control of the company from Enduring Wealth Capital Ltd., which wants to acquire 10 million Class-B shares held by Cango co-founders Zhang Xiaojun and Lin Jiayuan. Zhang is currently Cango's chairman, while Lin is its CEO. Zhang held 22.8% of Cango's ordinary shares with 48.4% of its voting power at the end of 2023, while Lin held 22.4% with 44.1% of the voting power, according to the company's latest annual report filed last April.

Enduring Wealth said it would like to purchase the 10 million shares from the co-founders "at a purchase price in cash to be agreed among the parties," according to Cango. As part of any agreement, Cango's management would be "restructured in such manner as requested by Enduring Wealth Capital," the statement added.

Furthermore, any deal would likely require Cango to dispose of its existing car-trading business in China, with Enduring Wealth offering to "introduce a potential buyer." Such moves would allow Cango, which is based in China but operates its bitcoin mining business outside the country, to terminate its status as a "China concept stock" with the U.S. securities regulator.

Enduring Capital's key decision makers are Andrea Dal Mas and Yu Peng, who are both directors of the company. Dal Mas' LinkedIn profile describes him as a managing partner at Singapore-based Antalpha Ventures, "where he focuses on strategic investments in blockchain technology and artificial intelligence companies." Cango described Yu as "a seasoned and accomplished finance professional with extensive experience in investment management and asset management." Yu was described as Antalpha's chief strategy officer in an August 2024 announcement from virtual asset manager Pando.

Cango said its board resolved to form a committee consisting of its three independent directors to consider the proposal.

Cango's shares rose 14.6% in Friday trading after the announcement. The company's stock is up nearly 150% over the last six months, most of that coming after Cango announced its entry into the bitcoin mining business last November. Before that, the company was mostly focused on the car business in China, starting as an auto financer before more recently shifting its business to auto trading services.

Cango used its large cash reserves to enter the bitcoin mining business, purchasing $250 million worth of mining machines with plans to acquire another $150 million worth. The company began mining bitcoins in November and had mined 1,944.2 bitcoins through the end of February.

Following its entry to the bitcoin mining business, the company's revenue jumped by more than a factor of five to 668 million yuan ($92 million) in last year's fourth quarter from 130.2 million a year earlier. Most of that came from the new bitcoin mining business, though the company continues to operate its car-trading business that offers both domestic and transborder trading services.