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's happening: Shares of Chinese online dating platform Jiayuan.com International Ltd (UNKNOWN:DATE.DL) were up about 8.5% as of noon Tuesday after it announced its board had received a non-binding acquisition proposal. Shares had jumped as much as 13% earlier in the day.
Specifically, Jiayuan.com says in a press release dated today that Vast Profit Holdings Limited proposed a transaction in which it would take Jiayuan.com private by acquiring all of its outstanding stock at a price of $5.37 per American depositary share. That's a 15.7% premium from yesterday's close.
Why it's happening: Jiayuan.com's press release also says that on March, 2, 2015, Vast Profit completed its acquisition of 8,003,763 ordinary shares of Jiayuan.com from Aprilsky, amounting to a roughly 16% stake in the company. For perspective, Aprilsky is a wholly owned subsidiary of the trustee of Pangu Trust. Jiayuan.com board director and co-chairman Ms. Haiyan Gong is the settlor of that trust, while her family members are the beneficiaries. Relatedly, Ms. Gong also resigned from her position as a director of the company today, and will no longer serve as its co-chairman. She will, however, continue to be a consultant for Jiayuan.
In addition, Jiayuan states Vast Profit's proposal letter indicates it expects to complete the acquisition of another 1,805,126 ordinary shares by March 15, 2015.
Finally, Jiayuan.com says its board is in the process of forming a special committee to consider the transaction, and insists no decisions have been made with regard to its response. Of course, patient investors would almost certainly prefer capitalizing instead on the enormous market opportunity Jiayuan.com enjoys, which makes the modest 15.7% acquisition premium seem rather anticlimactic -- especially with shares having fallen more than 30% over the past year. For now, I think investors would be wise to sit tight and see how Jiayuan's board decides to respond.