It has been a couple of days since CITIC Securities Company Limited (SHA:600030) submitted offers for the rest of the issued share capital of KVB Kunlun Financial Group Ltd (HKG:8077) and the canceling of all options in the Hong Kong-based FX broker.
Back then, we dared to call the offer of HK$0.65 per KVB’s share disappointing. The reasons for our judgement:
- The bid represents a discount of approximately 47.33% to the average closing price of HK$1.234 per KVB Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day before the bid was made.
- It also represents a discount of approximately 52.55% to the closing price of HK$1.37 per KVB Share as quoted on the Stock Exchange on the Last Trading Day before the proposal was made.
Obviously markets tend to agree with our assessment and have reacted to CITIC’s reluctance to offer more for the shares in the broker than it did earlier this year when it acquired a 59.37% stake in KVB.
Shares in the company closed at HK$1.35 per share today at HKEX, where KVB Kunlun is listed. This is a 10.6% drop in the share price for the day and the lowest level shares in the broker have traded since end of March this year.
KVB Kunlun’s share prices have now fallen in six straight trading sessions, down overall 24% in June.
KVB Kunlun’s share prices for the last 3 months.
Chart source: Google Finance.
The broker has to decide on CITIC’s offers until June 26, 2015. Meanwhile, the official advisor on the offers – Octal Capital Limited, called CITIC’s bid “fair and reasonable”.