KVB Kunlun agrees to sell 60% of issued share capital to CITIC Securities


KVB Kunlun Financial Group Ltd (HKG:8077), the retail Forex broker focused on the Hong Kong market, made an official announcement today regarding an agreement with CITIC Securities Company Limited (SHA:600030) on a deal that will see 60% of KVB’s issued shares get sold to the Chinese investment bank.

The agreement was reached on January 29, 2015, KVB says, with the official offer by CITIC expected to be announced soon.

Talks have been going on between the two companies at least since November 2014, and LeapRate reported back then that a potential investor had approached the Forex broker. The potential investor agreed to pay HKD 50 million to have the exclusive right to discuss a deal for 70 days. The exclusivity period expired on January 28, 2015.

Hong Kong’s Takeover Code states that an acquirer buying more than 30% of a company gives rise to an obligation for the acquirer to make a mandatory unconditional general offer for all the other company shares. So CITIC is now required to make a general offer for all KVB shares, at terms no worse than it has agreed to pay KVB’s controlling shareholder Mr. Li Zhi Da for his 60% stake.

The latest update signifies an important moment for the Asian market, as the wave of mergers and acquisitions that has been covering the Forex industry over the past couple of years, seems to be sweeping this region too. KVB has become a particularly lucrative target after some solid results on the back of improved volatility in the second half of 2014. According to the broker’s latest forecast, its revenues and profits in the second half of 2014 would be so robust that would help it reverse the dismal figures from the first half of 2014.

Trading in shares in KVB Kunlun was halted at 9am (HK time) today pending the deal announcement. Before the halt the shares traded at HK$1.41, well above CITIC’s HK$0.65 per share offer.

kvb_jan30_inside

Photo credit: Google Finance.

You can find the original announcement by KVB on the deal with CITIC here.

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KVB Kunlun agrees to sell 60% of issued share capital to CITIC Securities

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