KVB Kunlun sale to take place at HK$0.65 per share, shares plummet

Breaking Forex News… The next step in the KVB Kunlun sale saga has taken place, with the company disclosing some important – yet surprising – information. Specifically, KVB’s major shareholder, Mr. Li Zhi Da, has agreed to tender most of his 75% stake in KVB to a still unnamed acquirer for HK$0.65 per share, valuing KVB at HK$1.3 billion (about USD $169 million).

The surprising part? The market was clearly expecting a much higher offer.

As we reported earlier, news that a deal might be in the works sent KVB shares flying up to as high as HK$1.67 per share last week, although they did settle lower in the HK$1.10 range. News of the lower-than-expected offer price sent KVB shares down 7% in Monday HKEx trading and a further 16% today – although still well above the HK$0.65 offer price, closing Tuesday at HK$0.84.

KVB share price down

Clearly, the market is expecting a higher offer to emerge, at least as far as the public shareholders are concerned.

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.

At this point, a letter of intent (or LOI) has been signed between Mr. Li and the acquirer stating:

  • the Controlling Shareholder (Mr. Li) intends to sell more than 50% of KVB’s shares (he owns 75% in total)…;
  • … at an indicative price of HK$0.65 per share;
  • the payment method will be subject to further negotiations;
  • the potential purchaser is paying an exclusivity fee in the sum of HK$50 million to the Controlling Shareholder, in cash, within five business days after signing the LOI.
  • the Potential Purchaser is entitled to conduct due diligence.

We’ll continue to bring our readers more details as they emerge.

To see details of the full LOI click here.

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