Investors betting on a better offer for KVB Kunlun


After having its shares halted for four weeks, KVB Kunlun Financial Group Ltd (HKG:8077) restarted trading on the HKEx on Friday. Investors are clearly betting that China’s CITIC Securities will significantly sweeten its HK$0.65 per share offer for the Hong Kong retail forex broker, with KVB shares trading at more than double that level.

Trading as high as HK$2.30 early in the day, KVB shares settled Friday to close at HK$1.48 per share – 128% higher than the official HK$0.65 per share offer which CITIC has now made for the public shareholdings in KVB, matching the HK$0.65 per share acquisition of 60% of KVB which CITIC has closed on from KVB major shareholder Li Zhi Da.

Hong Kong’s Takeover Code requires an acquirer buying more than 30% of a public company to make a mandatory unconditional general offer for all the other company shares, at terms no worse than the offer made for the original 30%. But the acquirer can sweeten the offer.

While CITIC paid a total of HK$780 million (about USD $101 million) for 60% of KVB, it may need to pay a lot more than that for the remaining 40% of the company which it does not yet own. At HK$1.48 per share, the remaining 40% of KVB would cost CITIC a further HK$1.2 billion (or USD $154 million).

Will CITIC budge and offer more?

Well, it depends on how badly it wants to take KVB private and eliminate the minority shareholdings in the company. But if it doesn’t offer considerably more than HK$0.65 per share, it doesn’t seem likely to get many if any existing KVB shareholders to sell.

Stay tuned to LeapRate as we continue to cover this story.

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Investors betting on a better offer for KVB Kunlun

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