KVB Kunlun reports that M&A due diligence has begun


Nearly a month after it had reported that an acquirer had emerged to make a HK$0.65 bid for the company, Hong Kong retail forex broker KVB Kunlun Financial Group Ltd (HKG:8077) has finally provided an update, and in truth it isn’t much of one.

KVB has made a further filing with the Hong Kong Exchange (HKEx) that the still-unnamed acquirer has paid the required exclusivity fee of HK$50 million (USD $6.5 million) to KVB’s controlling shareholder Mr. Li Zhi Da, and has begun performing due diligence exercises on KVB.

That’s about it.

KVB did add that no progress has been made relating to the actual transaction, and that it was still unknown whether or not a deal would eventually take place.

While the HK$0.65 per share offer technically was made only for Mr. Li’s stake in the company (representing more than half the company’s shares), 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 if the deal with Mr. Li goes ahead, the mystery acquirer will need to make a general offer for all KVB shares, at terms no worse than Mr. Li receives.

KVB shares have come way down from original speculation after the (possible) deal was announced at the end of November, when the shares topped out at HK$1.67, but at HK$0.85 currently remain well above the HK$0.65 official offer price – indicating that traders expect a deal to indeed go through, and to go through at terms much improved from HK$0.65.

KVB Kunlun share price Dec

KVB Kunlun share price November 5 to present. Source: Google Finance.

To see the official KVB filing with the HKEx click here.

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KVB Kunlun reports that M&A due diligence has begun

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