Hong Kong retail Forex broker KVB Kunlun Financial Group Ltd (HKG:8077) today announced that it had received offers from securities giant CITIC Securities Company Limited (SHA:600030) for its entire issued share capital and cancellation of all existing options. The offers come after the companies finalised a previous deal that saw CITIC acquire a 59.37% stake in the broker at a price of HK$0.65 per share.
Many of the investors may end up disappointed as CITIC today refused to offer more for the rest of the broker’s shares than it had offered earlier for 1.2 billion shares (or a 59.37% stake) in KVB Kunlun. The offer per share in the broker remains at HK$0.65.
Why do we suppose that the offer is disappointing?
Well, we have to mention that the bid represents a discount of approximately 47.33% to the average closing price of HK$1.234 per KVB Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day. It also represents a discount of approximately 52.55% to the closing price of HK$1.37 per KVB Share as quoted on the Stock Exchange on the Last Trading Day.
However, CITIC stresses that its bid offers a premium of approximately 41.30% over the closing price of HK$0.46 per KVB Share as quoted on the Stock Exchange on 10 November 2014, being the last full business day prior to the commencement of the Offer Period.
If the offer is accepted, it will value the entire issued share capital of KVB Kunlun at HK$338,858,000 (US$43.7 million), with 521,320,000 KVB Shares to be subject to the offer.
CITIC bids HK$0.236 per outstanding KVB Option.
This price represents the difference between the exercise price of HK$0.414 of the outstanding KVB Options and the Share Offer Price of HK$0.65.
If all the 12,940,000 outstanding vested KVB Options are exercised in full, the maximum amount payable by the Offeror under the Option Offer (assuming no KVB Options are exercised prior to the Closing Date of the Offers and the Option Offer is accepted in full) is HK$3,990,760.
Independent financial advisor
Octal Capital Limited assessed both offers and found they were fair and reasonable.
CITIC plans to continue the existing principal businesses of KVB Kunlun Group.
It has no intention to make major changes to the employment matters or to redeploy assets of KVB Kunlun Group other than those in its ordinary and usual course of business.
CITIC says that KVB Kunlun should remain listed on the Stock Exchange.
A decision on the offers has to be made not later than June 26, 2015.
KVB Kunlun’s share prices for the past week. Chart credit: Google Finance.
To view the official filing with HKEX on the new offers, click here.