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China Zenix Auto International Limited Message Board

  • tradelogic2001 tradelogic2001 Jul 30, 2014 9:07 AM Flag

    Is Cash Buyout Still A Possibility

    after the CEO and his associates withdrew their phony buyout offer? In the light of his comments in his last announcement I now consider a less likely possibility but not implausible. He can still come forward with a cash offer of $4.00 or better for the remaining shares and own the whole company.

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    • I do not think a buyout by the founder is the Chinese way. It is a big boost to the CEO's guanxi (关系) to have a NYSE listed firm. There is nothing that prevents his taking advantage of the company now, with the public shareholders being minority shareholders. Taking advantage of the 洋鬼子 is a multi-century tradition in China. It simply makes no sense for him to do the cash buyout.

      If he needs to take the value up quickly, it would be easy to do, via cash dividends, of which he would pocket over 70%.

      Even if he does nothing, from this level, the value will increase at an above average rate. This company is clean to outsiders. It is a NYSE-listed company with no accounting scandals, two elderly experienced American outside board members, more than three years since the IPO, growing earnings in a profitable manner in a growing industry. This company is hitting every value investor's screen. Over time, a few will hit the stock and the price will increase.

      The more probable buyout is not from the founder. This company is worth a lot to other Chinese/Asian companies wanting to go public in the US. This company is the perfect reverse IPO vehicle for a Chinese auto related company.

      Sentiment: Buy

      • 1 Reply to bufordshighway
      • Thanks for the post bufordshinghway. I would have fully agreed with your view before the CEO's phony buyout offer and the long and abnormal delay by the board in making a decision which was no decision at all since the CEO withdrew his offer as I had expected. I still tend to agree with you though I would not totally dismiss the possibility of a cash offer. Despite the Chinese tradition, I am sure you are aware of other Chinese companies going private though the reverse merger has been much more common. In either case, the prospects are very positive and I hold a truckload waiting for much higher prices.

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