SORL Stock Skyrockets 30% on Buyout Deal
The acquisition by the consortium, headed by chairman and Ruili Group, prices the shares in SORL at $4.72 per ADS - that's 39% above Wednesday's close.
The stock in SORL Auto Parts Inc. (Nasdaq: SORL) skyrocketed 30% to $4.42 per American depositary share on Friday after the company announced that it is going private.
The Zhejiang-based maker of auto brake systems said in a statement today that a group led by the chairman and chief executive, Xiao Ping Zhang, two directors of SORL and Ruili Group Co. Ltd. are acquiring the shares in the company at $4.72 apiece. That represents a 39% premium of the previous close.
Under the agreement, SORL will merge with Ruili International Inc., a Delaware corporation, according to the report.
The original buyout proposal dates back to April. The board of directors of SORL has unanimously approved the deal, the company said.
The two parties have maintained a joint venture since January 2004, according to a filing from SORL earlier this month with the U.S. Securities and Exchange Commission. As of September, SORL held a 90% ownership in Ruili Group, the filing said.
SORL said the merger is expected to close during the second quarter in 2020. The members of the consortium, excluding Ruili Group, own an aggregate of around 59% of the company's shares, according to SORL.
A couple of weeks ago, SORL announced record sales for the third quarter, with revenue reaching $112 million, an increase of 3% year-over-year. Net income, the company said, dropped to $4.7 million, or 22 cents per share, compared with $5 million, or 29 cents per share, a year ago.
Founded in 1982, SORL sells its products in China and globally. According to SORL's statement, it is one of the top 100 auto component suppliers in China. It also has a product range that includes 65 categories with more than 2000 specifications in brake systems and others.