Boston, MA 05/20/2014 (wallstreetpr) – Charm Communications Inc (ADR) (NASDAQ:CHRM) soared by over 3% on Monday after the advertising agency located in China, revealed to have entered in a definitive agreement of merger with Engadin Parent Limited.
Proposed Price Below Expectation
Further, as per the disclosed details, Charm Communications Inc (ADR) (NASDAQ:CHRM)’s Chairman, He Dang along with its affiliates, would acquire each of the outstanding common stock of Charm Communication in exchange of $4.70 per American Depositary Share of the company or $2.35 in cash for each Class A common share along with $2.35 for each Class B common share. The offered proposal denotes a 14.3% premium over the company’s weighted average price of $4.11 per ADS as on September 27,2013, the day prior to when the company announced that it has received a “going proposal” offer. However, according to analysts’ the proposal is considerably undervalued. At least, one of the analyst project the value to be $5 per share, which is well below the 52-month high of the stock, that is, $5.89. At present, Dang and his associates retain nearly 55.3% of the company’s holding collectively. The transaction is expected to conclude by the end of the third quarter of the year.
Attracts Investigation
It is to be noted that the announcement attracts investigation from the Former United States Securities and Exchange Commission attorney Willie Briscor and Powers Taylor LLP, against the Board of Directors of Charm Communications Inc (ADR) (NASDAQ:CHRM). The main aim of the law firm is to establish fairness in the proposed transaction.
Dang will acquire the company through his owned company, Engadin Parent Limited along with his certain affiliates, which include a British Virgin Islands company, named Merry Circle Trading Limited; another one in the name of Honour Idea Limited and an investment fund associated with CMC Capital Partners HK Ltd. Merry Circle and Honour Idea, both are controlled by He Dang.
