Friday, August 14, 2009

In Some Cases, Things Move More Slowly In China

Yanzhou Coal Mining has been pursuing a takeover of the Australian company Felix Resources. The Yanzhou board has just given approval to the deal; Felix's board has already done so.

Yanzhou's stock has been halted because this takeover represents a material change in the company's fortunes. In the Canadian markets, halting happens all the time. The stock stops trading for sufficient time to get the news out; the halt typically lasts between thirty minutes and three hours. The Chinese stock markets have similar strictures, which are designed in accordance with a fairness standard: the quick should have no advantage over the less quick.

So, the Chinese coal company has been suspended to get the takeover news out; there's not much unusual in that to a Canadian like myself. What is unusual is the length. Yanzhou's been halted for almost a week.

It looks like some things are slower in China. Evidently, the halt period for a takeover includes the whole takeover process. I can't even say if Yanzhou will start trading tomorrow, even though the takeover's at the done-deal stage.

Update: An analyst with the Macquarie Group has panned the deal, recommending that shareholders reject Yanzhou's offer despite the Felix board's recommendation to vote for it. The reason given is that there's no takeover premium in Yanzhou's price.

So it's not quite a done deal yet...

Update 2: The story's made Yahoo Finance's roster. As it turns out, Yanzhou's shares have started trading again on the Hong Kong exchange: they gained 2.3%. The ADRs should start trading today on the NYSE.

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