Yongye Spikes After Proposed Deal

Updated

In today's edition, Motley Fool analyst Joel South discusses Yongye International and looks into the proposed sale of the company to a group of private investors led by Yongye's board of directors and CEO. The proposed deal of $6.60 per share for the Chinese agriculture company is close to a 40% premium from last Friday's close.

Even at a premium, this deal does not appear to be in the best interest of shareholders. The $6.60 per share is still significantly undervalued compared to the $7.60 book value per share. Yongye has no debt and has been growing both its top and bottom lines at an enormous clip over the past few years. This deal could fall apart because of the potential fiduciary conflict Yongye CEO Zishen Wu faces in taking the company private but also trying to find a value that is fair for shareholders and not too expensive for his holding company.


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The article Yongye Spikes After Proposed Deal originally appeared on Fool.com.

Joel South has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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