China Security & Surveillance Shares Popped: What You Need to Know

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 security equipment manufacturer China Security & Surveillance (NYSE: CSR  ) shot up today on news that its management team has entered into a management buyout agreement. Shares were up as much as 20% in intraday trading.

So what: It's not breaking news that management had designs on taking the company private; the company announced in March that it had received an offer. However, at the time there were very few transaction specifics offered. Today, the company not only offered some more details, but it announced it has agreed to the buyout offer. Under the agreement, shareholders will receive $6.50 in cash for their China Security & Surveillance shares. Management will be getting financing for the transaction from China Development Bank.

Now what: As of this writing, investors appear to be a bit skeptical that this buyout will go through. With shares trading at roughly $5.50, investors are allowing shares to sit well below the proposed takeout price. For those confident that the buyout will go through, there's an arbitrage opportunity here of close to 20%. However, with all of the concerns circling about Chinese small caps, if the deal falls apart for some reason, the stock would likely get hammered.

Want to keep up to date on China Security & Surveillance? Add it to your watchlist.

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.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1479724, ~/Articles/ArticleHandler.aspx, 8/27/2014 9:15:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement