Dallas, Texas 09/25/2013 (Financialstrend) – On September 24, top legal security firm Faruqi and Faruqi.LLP have released a press note indicating their intention to launch full scale investigation of the board of directors of Yongye International, Inc (NASDAQ:YONG) to determine if they have breached any of their fiduciary duties while negotiating a deal with Full Alliance International which was announced with much fanfare on September 23.
The investigation will centre around the process and the background discussions which the directors were involved in to determine the fair value of the publicly traded company. The law firm is trying to establish if the directors did follow a fair and thorough sales process before signing off on this sale considering that the Chairman and CEO of YONG himself is part of the private group which wants to take over the company. As part of their investigations, the lawyers will also try and establish if the company is being undervalued and if so by what percentage the share holders would be negatively impacted by the alleged undervaluation.
To bring the readers up to speed, the proposed takeover terms are as follows: Full Alliance International Ltd which is a Virgin Island incorporated company has agreed to pay $6.69 per share to the current share holders of Yongye in cash. Considering the company has roughly 50.7 million shares outstanding, the deal is expected to be around $339 million. This translates to a 12 % premium on the value of stock which was trading at $5.98 as of close of business on September 20.
For a while this deal had been in the works now. In October of 2012, a group of private investors which included YONG group’s CEO Zihsen Wu had made an offer of 6.60 per share. The board had been going back and forth with the group since then to arrive at a mutually satisfactory price for the stock. As of close of business on September 24, the company stock was trading at $6.27 down 0.32% from its Monday close.