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What: Shares of security equipment manufacturer China Security & Surveillance
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.
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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.