SkyPeople Might Lose The Deal That Rocketed Shares 400% Higher Last Summer
Shares of SkyPeople Fruit Juice Inc (NASDAQ: SPU) spiked 28 percent on Wednesday after the company issued its 10-Q filing on time — but deeper reading of the document prompted steep drops from session highs.
For the latter price movement, investors may have been reacting to specific details of the filing revealing the potential termination of a deal involving a SkyPeople subsidiary.
Timeline Of The Stock’s 2016 Strength
In June, Hedetang Holdings Co., Ltd. entered into a Share Transfer Agreement with Shaanxi New Silk Road Kiwifruit Group Inc. — a state-owned enterprise in China. The agreement said New Silk Road would acquire a 51 percent stake in a SkyPeople unit for a $46 million price.
At the time, this figure inspired hope among SkyPeople investors. News of the deal corresponded with a steep rise in shares, which rocketed from about $2 to $12 in July.
However, since the initial deal was announced, Chinese authorities have not yet approved the transaction, and no payments have been transferred between businesses.
Consequences Of Deal Developments
In light of the delay, SkyPeople initiated negotiations with New Silk Road to terminate the arrangement, according to the document filed Wednesday.
While stock experienced great volatility following the news, shares eventually rallied up 11.2 percent to close at $7.07.
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