According to the Chinese technology company, Bison Capital offered to acquire all outstanding shares for $9.80 each (a 42 percent premium to Tuesday’s close).
With shares trading more than 20 percent below the acquisition price, investors are sending a grim message about NQ’s credibility. In these situations, shares typically trade within a few points of the offer, pricing in the time value of money or probability of another bid.
Although non serious acquisition offers are rare, they are not unheard of as companies try to boost investor interest. This was the case in 2013 with Barnes & Noble when chairman Leonard Riggio offered to buy the company only to withdraw his offer shortly after.
More recently, this is believed to be the case for Tower Group. One week after a suitor cut its offer from $3 to $2.50, a $3.75 offer from Euroins Insurance Group was announced. Shares jumped as high as $3 before pulling back to the level they were trading at previously.
The Collapse of NQ’s Credibility
NQ Mobile has been under fire by Muddy Water’s Carson Block since October 2013 over a number of inconsistencies in the firm’s financial reporting. Shares are down almost 70 percent since the allegations began.
Hurting the firm further is the recent firing of PWC was its auditor. Investors are still waiting for NQ Mobile to file its 2013 annual report.
Shares of NQ Mobile were last trading 11.2 percent higher at $7.67. This is 27.8 percent below Bison Capital’s reported takeout offer.
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