In a report published Monday, JMP Securities analyst David Turkaly upgraded the rating on Mindray Medical International Ltd (NYSE: MR) from Market Underperform to Market Perform, after news of the company receiving an offer to be taken private for $30 per share.
Mindray announced that it had received an offer from Li Xiting and Cheng Minghe, its co-CEOs, along with Xu Hang, Chairman of the Board and former CEO, to take the company private for $30 per share.
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"While the fundamentals of the company remain negative, in our view, the shares will likely trade on the probability of completion of the deal, in the near term…Absent any material updates, we feel the shares are fairly valued at current levels and that they should continue to trade in this range," analyst David Turkaly said.
In the report JMP Securities noted 5 key points:
- Although the fundamentals are poor, this is unlikely to drive the shares in the near term
- The offer of $30 per share represents a premium of only 9.2 percent versus the price at which the shares closed on Wednesday. Investors may push for a higher premium.
- The three individuals forming the buyer group hold about 27.7 percent of the shares, while controling about 63.5 percent of the voting interest.
- The deal has not been finalized and is subject to obtaining financing.
- "We believe the buyers may be looking at this as an arbitrage opportunity as it would not represent the first time a Chinese company went private and subsequently re-listed on the Chinese market (likely at a much higher multiple)," Turkaly commented.
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