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Shah Capital offers to buy UTStarcom Holdings

NEW YORK (AP) -- UTStarcom Holdings Corp. shares soared Wednesday after a group of its investors offered to buy the Chinese telecommunications company in a deal that values it at about $125 million.

A group led by investment firm Shah Capital Management Inc. that includes UTStarcom Director Hong Liang Lu said in a Securities and Exchange Commission filing that it wants to acquire all of the UTStarcom stock it doesn't already own for $3.20 per share, and take the company private.

The offer represents a 36 percent premium over UTStarcom's Tuesday closing stock price. The shares jumped 16.5 percent in afternoon trading to $2.75, after peaking at $3.10 earlier in the session.

Based on Shah's estimate in the filing that UTStarcom has slightly more than 39 million outstanding shares, the offer values the company at about $124.9 million.

Shah said in its regulatory filing that it expects to spend about $103 million to acquire all of the shares not already owned by the group.

Shah and Lu currently hold a combined 20.8 percent of UTStarcom's outstanding stock, according to the company.

UTStarcom said its board has formed a special committee of three independent directors to consider this proposal.

UTStarcom sells its services to cable TV and telecommunications providers. The company was based in Alameda, Calif., until 2010 and is now headquartered in Beijing.