Shares of NQ Mobile (NYSE:NQ) were up 10.7% as of 12:30 p.m. EDT after the Chinese internet services specialist announced it will divest its FL Mobile and Showself's Live Social Video businesses.
The new agreement effectively solidifies a more vague non-binding letter of intent announced by NQ Mobile just over two months ago, which didn't identify the investor or the exact terms of the acquisitions.
As it stands, Tongfang Investment Series SPC will pay RMB 150 million in cash as non-refundable earnest money toward the full purchase price, then it will pay the remaining amount on or before May 31, 2017, after NQ Mobile delivers its equity interests in the segments to be acquired.
In addition, within three months of the completion of the purchases, Tongfang has an option to purchase $100 million class A common shares of NQ Mobile at roughly $1.05 per share, or $5.25 per American depositary share -- well above current ADS price of $4.22 per share. NQ Mobile also confirmed that a previously proposed investment of $101 million from management is now expected to be completed within three months after the sale of FL Mobile.
To be fair, this isn't the first time we've seen shares of NQ Mobile pop after announcing divestments of stakes in its various businesses, nor is it the first time the stock has been bolstered by management outlining proposals to buy shares of the company. So while it's hard to blame the market for bidding up NQ Mobile stock on the news, I'm content continuing to watch its progress from the sidelines.