Sunday, May 8, 2016

China Merchant Pacific - Buyout Offer $1.02/shr

China Merchant Group has launched a conditional voluntary cash offer of $1.02/shr for
China Merchant Pacific. the price will not be adjusted for the dividend to be paid on 19th May( 3.5 cents /shr).

The offer represent a premium of 22.9% over the last traded price of 83 cents on 5th May before trading halt pending news release.The Offeror current own 75.9% of the shares and intend to privatise and delist the company.

Frankly, I sort of saw this coming since last year when the the Offeror (through Easton Holding) took up all the rights issue at $1/shr when the share price was trading below $1.You list a company so that you can raise capital but if you cannot effectively raise capital and you own more than 75% of the company then it will make better sense to delist. Maybe their intention is to delist and then relist on HKEx later on.

As for me, I had the fortune to bought an additional 10 lots at 76 cents two months earlier
on top of what I already own. All in all, my average purchase price/shr is around 60 cents (exclusive of dividends). So the current buyout offer is attractive to me. The only remorse is that there is less one good company to invest in SGEx.

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