Hong Kong based retail forex broker KVB Kunlun saw an absolutely wild week in trading of its shares on the Hong Kong Exchange (HKG:8077), as investors tried to figure out the eventual outcome of an announced takeover bid for KVB. KVB’s shares moved at least 10% each and every trading day last week, in different directions virtually every day, on very heavy volume.
Although KVB shares closed on Friday exactly where they closed on Monday, the ride from point A to point B was a rocky and unpredictable one. Specifically:
As we reported earlier, 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). 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.
With KVB’s shares bouncing around above the HK$1.00 level, investors are clearly betting that the deal (or a better one) will indeed go ahead, and at much better terms than currently being offered.
Barring any update on the proposed acquisition, it promises to be another wild week for KVB. Stay tuned to LeapRate, we’ll bring you all the details as they unfold.