111 Inc. Forms Special Committee to Weigh Founders' Buyout

111, Inc., the Shanghai-based online pharmacy and drug distribution platform listed on Nasdaq as YI, has set up a special committee of independent directors to review a take-private offer from its own co-founders. The company announced the committee in a PR Newswire release on Monday, Sept. 28, 2026. Jian Sun chairs the three-member panel, which also includes Nee Chuan Teo and Jun Luo. Its mandate is to evaluate the preliminary, non-binding proposal dated Sept. 16 and other strategic alternatives. The board said no decisions have been made and there is no assurance a definitive agreement will follow.

The Offer: $4.52 per ADS in Cash

The bid came from co-founder and co-chairman Dr. Gang Yu, co-founder, co-chairman and chief executive Junling Liu, and a financial sponsor, Huadeng Tech BioArray Ventures Ltd. According to the proposal letter filed with the SEC, the group offered $0.226 per Class A ordinary share, or $4.52 per American depositary share, for every share it does not already own. Each ADS represents 20 Class A shares.

The letter says the price is a 29.5% premium to the ADS closing price on Tuesday, Sept. 15, the last trading day before the proposal, and a 20% premium to the average closing price over the previous 60 trading days. The buyers plan to pay with equity alone: rollover shares from the co-founders plus a cash contribution from the sponsor. As a result, the letter says, the deal would not carry a financing condition. The group has hired O'Melveny & Myers as legal adviser.

Founders Already Control 91.3% of the Vote

The co-founders own about 1.3% of the Class A shares and all of the Class B shares, which together make up about 41.6% of 111's share capital and about 91.3% of its voting power, according to the letter. Under a consortium agreement signed the same day, they have agreed to vote all of their shares in favor of the deal.

Because of that control, the proposal letter itself asks the board to appoint a committee of independent and disinterested directors with its own legal and financial advisers. The buyers say they will not proceed unless that committee approves the transaction, and that directors affiliated with them will stay out of the review. They also say the business would continue to run in a way generally consistent with its current operations.

The Same Founders Tried in 2022

This is the second founder-led buyout attempt in four years. On Friday, Sept. 9, 2022, Yu and Liu, then backed by Shanghai Guosheng Capital Management, proposed paying $1.83 per Class A share, or $3.66 per ADS when each ADS represented two shares. A special committee made up of the same three directors hired Houlihan Lokey China as financial adviser and Kirkland & Ellis as U.S. legal counsel. On Feb. 27, 2024, the consortium withdrew both its Sept. 9, 2022, proposal and a follow-up dated Oct. 29, 2022, and ended talks with the committee.

The per-share price has since fallen sharply. 111 changed its ADS ratio from two shares to 20 shares per ADS on Jan. 24, 2025. On a like-for-like basis, the new offer of $0.226 per Class A share is about 88% below the $1.83 offered in 2022, which would equal $36.60 per ADS at today's ratio.

Revenue Is Shrinking and Losses Are Widening

111 runs 1 Pharmacy, an online retail pharmacy; 1 Medicine, a B2B sourcing platform for pharmacies; and 1 Clinic, an internet hospital. In the second quarter, B2B net revenue was RMB2.24 billion, about 97.5% of the total, while B2C brought in RMB57.9 million.

The company reported its second-quarter results on Sept. 17, the same day it disclosed the buyout proposal. Net revenue fell 28.3% to RMB2.3 billion ($339.0 million), which management attributed to a shift toward an asset-light model and the sale of underperforming subsidiaries last year. Loss from operations was RMB23.2 million, compared with operating income of RMB0.1 million a year earlier, and the net loss widened to RMB31.7 million ($4.7 million) from RMB7.3 million. Management said the quarter included severance costs from cutting back-office staff as it adopts AI agents.

The balance sheet is tight. Cash, restricted cash and short-term investments fell to RMB381.1 million ($56.2 million) at June 30 from RMB611.3 million at the end of 2025. 111 still owes RMB956.7 million to investors in its 1 Pharmacy Technology unit under 2020 equity deals, and holders of 63.8% of that principal have agreed to extend repayment. For full-year 2025, the company reported revenue of RMB12.6 billion, down 12.8%, a net loss of RMB22.5 million and operating cash flow of RMB119.1 million.

A $32 Million Market Value

Special Sits Digest lists 111's ADSs at $3.60, which gives a market capitalization of about $32 million and an enterprise value of $159 million. At that price the $4.52 offer sits about 26% higher. The ADSs rose 4.73% on Sept. 17, the day the bid became public, according to StockTitan, and traded at $3.56 on the morning of Sept. 18, Market Chameleon reported.

The all-equity structure sets this deal apart from leveraged buyouts, where lenders have been pushing back on terms, as they did when KKR delayed a software take-private. The bid also lands as Goldman Sachs picks China healthcare stocks for a post-AI trade, as TradeFlock has reported.

No Advisers Named Yet

Monday's announcement did not say which financial or legal advisers the committee will hire. In 2022, the company named the committee's advisers on Sept. 23, two weeks after the proposal arrived. The buyers have said they are ready to negotiate a merger agreement quickly, but any deal needs the committee's approval first.