Why 7 Days Group Holdings' Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of China-based hotel operator 7 Days Group Holdings (NYS: SVN) jumped as much as 15% after receiving an offer to be taken private by its co-chairmen.
So what: A consortium made up of 7 Days' co-chairmen, Boquan He and Nanyan Zheng, as well as Carlyle Group (NAS: CG) and Sequoia Capital in China, have made a collective bid of $12.70 per share for 7 Days Group. The group plans to finance the deal through equity capital and debt offerings.
Now what: Today is "go private day" apparently because American Greetings (NYS: AM) also received a buyout offer from its management team to be taken private. There's some trepidation about the deal given the shaky financials we've witnessed from Chinese stocks since 2010, which could be one reason the stock hasn't traded anywhere near the $12.70 offer price yet. I feel investors would also like to see concrete evidence of the financial backing first before they commit to the buyout. Personally, I'm staying on the sidelines as the possible gain from an arbitrage opportunity is too small to merit risking an investment here.
Craving more input? Start by adding 7 Days Group Holdings to your free and personalized Watchlist so you can keep up on the latest news with the company.
The article Why 7 Days Group Holdings' Shares Jumped originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.